Correlation Between Broadridge Financial and XLMedia PLC

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Can any of the company-specific risk be diversified away by investing in both Broadridge Financial and XLMedia PLC 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 Broadridge Financial and XLMedia PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadridge Financial Solutions and XLMedia PLC, you can compare the effects of market volatilities on Broadridge Financial and XLMedia PLC 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 Broadridge Financial with a short position of XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadridge Financial and XLMedia PLC.

Diversification Opportunities for Broadridge Financial and XLMedia PLC

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Broadridge and XLMedia is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC and Broadridge 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 Broadridge Financial Solutions are associated (or correlated) with XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and XLMedia PLC go up and down completely randomly.

Pair Corralation between Broadridge Financial and XLMedia PLC

Assuming the 90 days trading horizon Broadridge Financial Solutions is expected to generate 0.21 times more return on investment than XLMedia PLC. However, Broadridge Financial Solutions is 4.85 times less risky than XLMedia PLC. It trades about 0.11 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.0 per unit of risk. If you would invest  20,905  in Broadridge Financial Solutions on September 23, 2024 and sell it today you would earn a total of  1,515  from holding Broadridge Financial Solutions or generate 7.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Broadridge Financial Solutions  vs.  XLMedia PLC

 Performance 
       Timeline  
Broadridge Financial 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
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. In spite of comparatively uncertain basic indicators, Broadridge Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.
XLMedia PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days XLMedia PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, XLMedia PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Broadridge Financial and XLMedia PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Broadridge Financial and XLMedia PLC

The main advantage of trading using opposite Broadridge Financial and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadridge Financial position performs unexpectedly, XLMedia PLC 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.
The idea behind Broadridge Financial Solutions and XLMedia PLC 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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