Correlation Between Broadway Financial and Urban One

Can any of the company-specific risk be diversified away by investing in both Broadway Financial and Urban One 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 Broadway Financial and Urban One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Broadway Financial and Urban One, you can compare the effects of market volatilities on Broadway Financial and Urban One 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 Broadway Financial with a short position of Urban One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadway Financial and Urban One.

Diversification Opportunities for Broadway Financial and Urban One

0.03

Correlation Coefficient

Broadway Financial  Urban One

Significant diversification

The 3 months correlation between Broadway and Urban is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Broadway Financial and Urban One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban One and Broadway Financial 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 Broadway Financial are associated (or correlated) with Urban One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban One has no effect on the direction of Broadway Financial i.e., Broadway Financial and Urban One go up and down completely randomly.

Pair Corralation between Broadway Financial and Urban One

Given the investment horizon of 90 days Broadway Financial is expected to generate 0.8 times more return on investment than Urban One. However, Broadway Financial is 1.24 times less risky than Urban One. It trades about 0.03 of its potential returns per unit of risk. Urban One is currently generating about -0.05 per unit of risk. If you would invest  689.00  in Broadway Financial on September 5, 2024 and sell it today you would earn a total of  22.00  from holding Broadway Financial or generate 3.19% return on investment over 90 days.

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

Broadway Financial  vs.  Urban One

Broadway Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Broadway Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Broadway Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Urban One

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Urban One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Broadway Financial and Urban One

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

The idea behind Broadway Financial and Urban One 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.