Correlation Between FirstCash and Broad Capital

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

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

Diversification Opportunities for FirstCash and Broad Capital

-0.79

Correlation Coefficient

FirstCash  Broad Capital

Pay attention - limited upside

The 3 months correlation between FirstCash and Broad is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash and Broad Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broad Capital Acquisition and FirstCash 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 FirstCash are associated (or correlated) with Broad Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broad Capital Acquisition has no effect on the direction of FirstCash i.e., FirstCash and Broad Capital go up and down completely randomly.

Pair Corralation between FirstCash and Broad Capital

Given the investment horizon of 90 days FirstCash is expected to under-perform the Broad Capital. But the stock apears to be less risky and, when comparing its historical volatility, FirstCash is 76.72 times less risky than Broad Capital. The stock trades about 0.0 of its potential returns per unit of risk. The Broad Capital Acquisition is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,120  in Broad Capital Acquisition on October 7, 2024 and sell it today you would earn a total of  57.00  from holding Broad Capital Acquisition or generate 5.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	72.98%
Values	Daily Returns

FirstCash  vs.  Broad Capital Acquisition

FirstCash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FirstCash has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and 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.

Broad Capital Acquisition

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Broad Capital Acquisition are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Broad Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FirstCash and Broad Capital

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

The idea behind FirstCash and Broad Capital Acquisition 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.