Correlation Between Clean Energy and Broadridge Financial

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

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

Diversification Opportunities for Clean Energy and Broadridge Financial

0.15

Correlation Coefficient

Clean Energy  Broadridge Financial

Average diversification

The 3 months correlation between Clean and Broadridge is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and Broadridge Financial Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadridge Financial and Clean Energy 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 Clean Energy Fuels 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 Clean Energy i.e., Clean Energy and Broadridge Financial go up and down completely randomly.

Pair Corralation between Clean Energy and Broadridge Financial

Assuming the 90 days horizon Clean Energy Fuels is expected to under-perform the Broadridge Financial. In addition to that, Clean Energy is 2.98 times more volatile than Broadridge Financial Solutions. It trades about -0.01 of its total potential returns per unit of risk. Broadridge Financial Solutions is currently generating about 0.09 per unit of volatility. If you would invest  12,717  in Broadridge Financial Solutions on October 11, 2024 and sell it today you would earn a total of  8,883  from holding Broadridge Financial Solutions or generate 69.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Clean Energy Fuels  vs.  Broadridge Financial Solutions

Clean Energy Fuels

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Energy Fuels are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Clean Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Broadridge Financial

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Broadridge Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Clean Energy and Broadridge Financial

The main advantage of trading using opposite Clean Energy and Broadridge Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy 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 Clean Energy Fuels 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.