Correlation Between CACI International and Broadridge Financial

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Can any of the company-specific risk be diversified away by investing in both CACI International 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 CACI International and Broadridge Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CACI International and Broadridge Financial Solutions, you can compare the effects of market volatilities on CACI International 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 CACI International with a short position of Broadridge Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CACI International and Broadridge Financial.

Diversification Opportunities for CACI International and Broadridge Financial

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between CACI and Broadridge is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CACI International and Broadridge Financial Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadridge Financial and CACI International 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 CACI International 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 CACI International i.e., CACI International and Broadridge Financial go up and down completely randomly.

Pair Corralation between CACI International and Broadridge Financial

Given the investment horizon of 90 days CACI International is expected to generate 1.15 times less return on investment than Broadridge Financial. But when comparing it to its historical volatility, CACI International is 1.02 times less risky than Broadridge Financial. It trades about 0.09 of its potential returns per unit of risk. Broadridge Financial Solutions is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  20,066  in Broadridge Financial Solutions on December 30, 2023 and sell it today you would earn a total of  420.00  from holding Broadridge Financial Solutions or generate 2.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CACI International  vs.  Broadridge Financial Solutions

 Performance 
       Timeline  
CACI International 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in CACI International are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal fundamental indicators, CACI International demonstrated solid returns over the last few months and may actually be approaching a breakup point.
Broadridge Financial 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions are ranked lower than 4 (%) 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.

CACI International and Broadridge Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CACI International and Broadridge Financial

The main advantage of trading using opposite CACI International and Broadridge Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CACI International 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 CACI International 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.
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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