Correlation Between Broad Capital and PhenixFIN 525

Can any of the company-specific risk be diversified away by investing in both Broad Capital and PhenixFIN 525 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 PhenixFIN 525 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 PhenixFIN 525, you can compare the effects of market volatilities on Broad Capital and PhenixFIN 525 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 PhenixFIN 525. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broad Capital and PhenixFIN 525.

Diversification Opportunities for Broad Capital and PhenixFIN 525

-0.56

Correlation Coefficient

Broad Capital  PhenixFIN 525

Excellent diversification

The 3 months correlation between Broad and PhenixFIN is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and PhenixFIN 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PhenixFIN 525 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 PhenixFIN 525. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PhenixFIN 525 has no effect on the direction of Broad Capital i.e., Broad Capital and PhenixFIN 525 go up and down completely randomly.

Pair Corralation between Broad Capital and PhenixFIN 525

Assuming the 90 days horizon Broad Capital Acquisition is expected to generate 34.2 times more return on investment than PhenixFIN 525. However, Broad Capital is 34.2 times more volatile than PhenixFIN 525. It trades about 0.05 of its potential returns per unit of risk. PhenixFIN 525 is currently generating about 0.16 per unit of risk. If you would invest  17.00  in Broad Capital Acquisition on September 25, 2024 and sell it today you would lose (2.00) from holding Broad Capital Acquisition or give up 11.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	31.75%
Values	Daily Returns

Broad Capital Acquisition  vs.  PhenixFIN 525

Broad Capital Acquisition

Risk-Adjusted Performance

0 of 100

Insignificant

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 inconsistent fundamental indicators, Broad Capital reported solid returns over the last few months and may actually be approaching a breakup point.

PhenixFIN 525

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PhenixFIN 525 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, PhenixFIN 525 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Broad Capital and PhenixFIN 525

The main advantage of trading using opposite Broad Capital and PhenixFIN 525 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broad Capital position performs unexpectedly, PhenixFIN 525 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 PhenixFIN 525 will offset losses from the drop in PhenixFIN 525's long position.

The idea behind Broad Capital Acquisition and PhenixFIN 525 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.