Correlation Between Broad Capital and Granite Point

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

Diversification Opportunities for Broad Capital and Granite Point

-0.74

Correlation Coefficient

Broad Capital  Granite Point

Pay attention - limited upside

The 3 months correlation between Broad and Granite is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and Granite Point Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Point Mortgage 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 Granite Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Point Mortgage has no effect on the direction of Broad Capital i.e., Broad Capital and Granite Point go up and down completely randomly.

Pair Corralation between Broad Capital and Granite Point

Assuming the 90 days horizon Broad Capital Acquisition is expected to generate 0.24 times more return on investment than Granite Point. However, Broad Capital Acquisition is 4.14 times less risky than Granite Point. It trades about 0.04 of its potential returns per unit of risk. Granite Point Mortgage is currently generating about -0.01 per unit of risk. If you would invest  1,015  in Broad Capital Acquisition on September 2, 2024 and sell it today you would earn a total of  116.00  from holding Broad Capital Acquisition or generate 11.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Broad Capital Acquisition  vs.  Granite Point Mortgage

Broad Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broad Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Granite Point Mortgage

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Point Mortgage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Granite Point unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broad Capital and Granite Point

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

The idea behind Broad Capital Acquisition and Granite Point Mortgage 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.