Correlation Between Broadridge Financial and KBR

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

Diversification Opportunities for Broadridge Financial and KBR

-0.56

Correlation Coefficient

Broadridge Financial  KBR

Excellent diversification

The 3 months correlation between Broadridge and KBR is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and KBR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBR Inc 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 KBR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBR Inc has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and KBR go up and down completely randomly.

Pair Corralation between Broadridge Financial and KBR

Allowing for the 90-day total investment horizon Broadridge Financial Solutions is expected to generate 0.67 times more return on investment than KBR. However, Broadridge Financial Solutions is 1.49 times less risky than KBR. It trades about -0.01 of its potential returns per unit of risk. KBR Inc is currently generating about -0.16 per unit of risk. If you would invest  22,662  in Broadridge Financial Solutions on September 22, 2024 and sell it today you would lose (61.00) from holding Broadridge Financial Solutions or give up 0.27% of portfolio value over 90 days.

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

Broadridge Financial Solutions  vs.  KBR Inc

Broadridge Financial

Risk-Adjusted Performance

9 of 100

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. 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.

KBR Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KBR Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest sluggish performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Broadridge Financial and KBR

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

The idea behind Broadridge Financial Solutions and KBR Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.