Correlation Between HF SINCLAIR and Broadcom

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

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

Diversification Opportunities for HF SINCLAIR and Broadcom

-0.68

Correlation Coefficient

HF SINCLAIR  Broadcom

Excellent diversification

The 3 months correlation between HL80 and Broadcom is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding HF SINCLAIR P and Broadcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadcom and HF SINCLAIR 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 HF SINCLAIR P are associated (or correlated) with Broadcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadcom has no effect on the direction of HF SINCLAIR i.e., HF SINCLAIR and Broadcom go up and down completely randomly.

Pair Corralation between HF SINCLAIR and Broadcom

Assuming the 90 days trading horizon HF SINCLAIR P is expected to under-perform the Broadcom. But the stock apears to be less risky and, when comparing its historical volatility, HF SINCLAIR P is 2.0 times less risky than Broadcom. The stock trades about -0.15 of its potential returns per unit of risk. The Broadcom is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  15,287  in Broadcom on September 28, 2024 and sell it today you would earn a total of  6,953  from holding Broadcom or generate 45.48% return on investment over 90 days.

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

HF SINCLAIR P  vs.  Broadcom

HF SINCLAIR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF SINCLAIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Broadcom

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Broadcom unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HF SINCLAIR and Broadcom

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

The idea behind HF SINCLAIR P and Broadcom 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.