Correlation Between Broadcom and CI Financial

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

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

Diversification Opportunities for Broadcom and CI Financial

0.91

Correlation Coefficient

Broadcom  CI Financial

Almost no diversification

The 3 months correlation between Broadcom and CIX is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Broadcom and CI Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Financial Corp 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 CI Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Financial Corp has no effect on the direction of Broadcom i.e., Broadcom and CI Financial go up and down completely randomly.

Pair Corralation between Broadcom and CI Financial

Assuming the 90 days trading horizon Broadcom is expected to generate 16.22 times more return on investment than CI Financial. However, Broadcom is 16.22 times more volatile than CI Financial Corp. It trades about 0.29 of its potential returns per unit of risk. CI Financial Corp is currently generating about 0.27 per unit of risk. If you would invest  5,365  in Broadcom on May 16, 2025 and sell it today you would earn a total of  1,953  from holding Broadcom or generate 36.4% return on investment over 90 days.

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

Broadcom  vs.  CI Financial Corp

Broadcom

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Broadcom exhibited solid returns over the last few months and may actually be approaching a breakup point.

CI Financial Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Financial Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Broadcom and CI Financial

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

The idea behind Broadcom and CI Financial Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.