Correlation Between Wheaton Precious and Broadridge Financial

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

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

Diversification Opportunities for Wheaton Precious and Broadridge Financial

0.03

Correlation Coefficient

Wheaton Precious  Broadridge Financial

Significant diversification

The 3 months correlation between Wheaton and Broadridge is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Broadridge Financial Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadridge Financial and Wheaton Precious 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 Wheaton Precious Metals 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 Wheaton Precious i.e., Wheaton Precious and Broadridge Financial go up and down completely randomly.

Pair Corralation between Wheaton Precious and Broadridge Financial

Assuming the 90 days trading horizon Wheaton Precious is expected to generate 1.26 times less return on investment than Broadridge Financial. In addition to that, Wheaton Precious is 2.27 times more volatile than Broadridge Financial Solutions. It trades about 0.05 of its total potential returns per unit of risk. Broadridge Financial Solutions is currently generating about 0.14 per unit of volatility. If you would invest  20,815  in Broadridge Financial Solutions on September 25, 2024 and sell it today you would earn a total of  1,907  from holding Broadridge Financial Solutions or generate 9.16% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Broadridge Financial Solutions

Wheaton Precious Metals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Wheaton Precious may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Broadridge Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions are ranked lower than 11 (%) 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.

Pair Trading with Wheaton Precious and Broadridge Financial

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

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.