Correlation Between Capstone Technologies and Broadridge Financial

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

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

Diversification Opportunities for Capstone Technologies and Broadridge Financial

-0.42

Correlation Coefficient

Capstone Technologies  Broadridge Financial

Very good diversification

The 3 months correlation between Capstone and Broadridge is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Technologies Group and Broadridge Financial Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadridge Financial and Capstone Technologies 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 Capstone Technologies Group are associated (or correlated) with Broadridge Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadridge Financial has no effect on the direction of Capstone Technologies i.e., Capstone Technologies and Broadridge Financial go up and down completely randomly.

Pair Corralation between Capstone Technologies and Broadridge Financial

Given the investment horizon of 90 days Capstone Technologies is expected to generate 12.0 times less return on investment than Broadridge Financial. But when comparing it to its historical volatility, Capstone Technologies Group is 1.85 times less risky than Broadridge Financial. It trades about 0.0 of its potential returns per unit of risk. Broadridge Financial Solutions is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  23,514  in Broadridge Financial Solutions on November 28, 2024 and sell it today you would earn a total of  166.00  from holding Broadridge Financial Solutions or generate 0.71% return on investment over 90 days.

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

Capstone Technologies Group  vs.  Broadridge Financial Solutions

Capstone Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capstone Technologies Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Capstone Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Broadridge Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Broadridge Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Capstone Technologies and Broadridge Financial

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

The idea behind Capstone Technologies Group and Broadridge Financial Solutions 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.