Correlation Between Broadcom and Impax Asset

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

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

Diversification Opportunities for Broadcom and Impax Asset

0.96

Correlation Coefficient

Broadcom  Impax Asset

Almost no diversification

The 3 months correlation between Broadcom and Impax is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Broadcom and Impax Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impax Asset Management and Broadcom 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 Broadcom are associated (or correlated) with Impax Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impax Asset Management has no effect on the direction of Broadcom i.e., Broadcom and Impax Asset go up and down completely randomly.

Pair Corralation between Broadcom and Impax Asset

Assuming the 90 days trading horizon Broadcom is expected to generate 0.87 times more return on investment than Impax Asset. However, Broadcom is 1.15 times less risky than Impax Asset. It trades about 0.38 of its potential returns per unit of risk. Impax Asset Management is currently generating about 0.29 per unit of risk. If you would invest  17,875  in Broadcom on April 23, 2025 and sell it today you would earn a total of  11,131  from holding Broadcom or generate 62.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Broadcom  vs.  Impax Asset Management

Broadcom

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Broadcom unveiled solid returns over the last few months and may actually be approaching a breakup point.

Impax Asset Management

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Impax Asset Management are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Impax Asset exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broadcom and Impax Asset

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

The idea behind Broadcom and Impax Asset Management 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.