Correlation Between Broadridge Financial and HNI Corp

Can any of the company-specific risk be diversified away by investing in both Broadridge Financial and HNI Corp 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 HNI Corp 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 HNI Corp, you can compare the effects of market volatilities on Broadridge Financial and HNI Corp 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 HNI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadridge Financial and HNI Corp.

Diversification Opportunities for Broadridge Financial and HNI Corp

0.84

Correlation Coefficient

Broadridge Financial  HNI Corp

Very poor diversification

The 3 months correlation between Broadridge and HNI is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and HNI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNI Corp 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 HNI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNI Corp has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and HNI Corp go up and down completely randomly.

Pair Corralation between Broadridge Financial and HNI Corp

Allowing for the 90-day total investment horizon Broadridge Financial Solutions is expected to generate 0.61 times more return on investment than HNI Corp. However, Broadridge Financial Solutions is 1.65 times less risky than HNI Corp. It trades about 0.19 of its potential returns per unit of risk. HNI Corp is currently generating about 0.03 per unit of risk. If you would invest  20,781  in Broadridge Financial Solutions on September 18, 2024 and sell it today you would earn a total of  2,411  from holding Broadridge Financial Solutions or generate 11.6% return on investment over 90 days.

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

Broadridge Financial Solutions  vs.  HNI Corp

Broadridge Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Broadridge Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

HNI Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HNI Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, HNI Corp is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Broadridge Financial and HNI Corp

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

The idea behind Broadridge Financial Solutions and HNI Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.