Correlation Between Broad Capital and Newtek Business

Can any of the company-specific risk be diversified away by investing in both Broad Capital and Newtek Business 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 Newtek Business 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 Newtek Business Services, you can compare the effects of market volatilities on Broad Capital and Newtek Business 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 Newtek Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broad Capital and Newtek Business.

Diversification Opportunities for Broad Capital and Newtek Business

-0.49

Correlation Coefficient

Broad Capital  Newtek Business

Very good diversification

The 3 months correlation between Broad and Newtek is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and Newtek Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtek Business Services 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 Newtek Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtek Business Services has no effect on the direction of Broad Capital i.e., Broad Capital and Newtek Business go up and down completely randomly.

Pair Corralation between Broad Capital and Newtek Business

Assuming the 90 days horizon Broad Capital Acquisition is expected to generate 40.01 times more return on investment than Newtek Business. However, Broad Capital is 40.01 times more volatile than Newtek Business Services. It trades about 0.37 of its potential returns per unit of risk. Newtek Business Services is currently generating about -0.03 per unit of risk. If you would invest  11.00  in Broad Capital Acquisition on September 16, 2024 and sell it today you would earn a total of  6.00  from holding Broad Capital Acquisition or generate 54.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	47.62%
Values	Daily Returns

Broad Capital Acquisition  vs.  Newtek Business Services

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.

Newtek Business Services

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newtek Business Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Newtek Business is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Broad Capital and Newtek Business

The main advantage of trading using opposite Broad Capital and Newtek Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broad Capital position performs unexpectedly, Newtek Business 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 Newtek Business will offset losses from the drop in Newtek Business' long position.

The idea behind Broad Capital Acquisition and Newtek Business Services 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.