Correlation Between Broadridge Financial and Aurora Innovation

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

Diversification Opportunities for Broadridge Financial and Aurora Innovation

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Broadridge and Aurora is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and Aurora Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Innovation 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 Aurora Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Innovation has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and Aurora Innovation go up and down completely randomly.

Pair Corralation between Broadridge Financial and Aurora Innovation

Allowing for the 90-day total investment horizon Broadridge Financial Solutions is expected to generate 0.24 times more return on investment than Aurora Innovation. However, Broadridge Financial Solutions is 4.11 times less risky than Aurora Innovation. It trades about -0.22 of its potential returns per unit of risk. Aurora Innovation is currently generating about -0.2 per unit of risk. If you would invest  20,632  in Broadridge Financial Solutions on November 24, 2023 and sell it today you would lose (974.00) from holding Broadridge Financial Solutions or give up 4.72% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Broadridge Financial Solutions  vs.  Aurora Innovation

 Performance 
       Timeline  
Broadridge Financial 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Broadridge Financial is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
Aurora Innovation 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Innovation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Aurora Innovation reported solid returns over the last few months and may actually be approaching a breakup point.

Broadridge Financial and Aurora Innovation Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Broadridge Financial and Aurora Innovation

The main advantage of trading using opposite Broadridge Financial and Aurora Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadridge Financial position performs unexpectedly, Aurora Innovation 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 Aurora Innovation will offset losses from the drop in Aurora Innovation's long position.
The idea behind Broadridge Financial Solutions and Aurora Innovation 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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