Correlation Between Plaza Retail and Broadcom

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

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

Diversification Opportunities for Plaza Retail and Broadcom

0.94

Correlation Coefficient

Plaza Retail  Broadcom

Almost no diversification

The 3 months correlation between Plaza and Broadcom is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT and Broadcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadcom and Plaza Retail 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 Plaza Retail REIT 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 Plaza Retail i.e., Plaza Retail and Broadcom go up and down completely randomly.

Pair Corralation between Plaza Retail and Broadcom

Assuming the 90 days trading horizon Plaza Retail is expected to generate 6.3 times less return on investment than Broadcom. But when comparing it to its historical volatility, Plaza Retail REIT is 3.41 times less risky than Broadcom. It trades about 0.22 of its potential returns per unit of risk. Broadcom is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  4,160  in Broadcom on April 23, 2025 and sell it today you would earn a total of  2,619  from holding Broadcom or generate 62.96% return on investment over 90 days.

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

Plaza Retail REIT  vs.  Broadcom

Plaza Retail REIT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plaza Retail REIT are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Plaza Retail may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Broadcom

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Broadcom exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Plaza Retail and Broadcom

The main advantage of trading using opposite Plaza Retail and Broadcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plaza Retail 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 Plaza Retail REIT 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.