Correlation Between Broad Capital and IB Acquisition

Can any of the company-specific risk be diversified away by investing in both Broad Capital and IB Acquisition at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Broad Capital and IB Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Broad Capital Acquisition and IB Acquisition Corp, you can compare the effects of market volatilities on Broad Capital and IB Acquisition and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Broad Capital with a short position of IB Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broad Capital and IB Acquisition.

Diversification Opportunities for Broad Capital and IB Acquisition

0.09

Correlation Coefficient

Broad Capital  IB Acquisition

Significant diversification

The 3 months correlation between Broad and IBACR is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and IB Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IB Acquisition Corp and Broad Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Broad Capital Acquisition are associated (or correlated) with IB Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IB Acquisition Corp has no effect on the direction of Broad Capital i.e., Broad Capital and IB Acquisition go up and down completely randomly.

Pair Corralation between Broad Capital and IB Acquisition

Assuming the 90 days horizon Broad Capital Acquisition is expected to generate 1.58 times more return on investment than IB Acquisition. However, Broad Capital is 1.58 times more volatile than IB Acquisition Corp. It trades about 0.09 of its potential returns per unit of risk. IB Acquisition Corp is currently generating about 0.03 per unit of risk. If you would invest  17.00  in Broad Capital Acquisition on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Broad Capital Acquisition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	44.44%
Values	Daily Returns

Broad Capital Acquisition  vs.  IB Acquisition Corp

Broad Capital Acquisition

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Broad Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively abnormal fundamental indicators, Broad Capital reported solid returns over the last few months and may actually be approaching a breakup point.

IB Acquisition Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IB Acquisition Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, IB Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broad Capital and IB Acquisition

The main advantage of trading using opposite Broad Capital and IB Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broad Capital position performs unexpectedly, IB Acquisition can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IB Acquisition will offset losses from the drop in IB Acquisition's long position.

The idea behind Broad Capital Acquisition and IB Acquisition Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.