Correlation Between Broadcom and Treasury Yield

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

By analyzing existing cross correlation between Broadcom and Treasury Yield 5, you can compare the effects of market volatilities on Broadcom and Treasury Yield 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 Treasury Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadcom and Treasury Yield.

Diversification Opportunities for Broadcom and Treasury Yield

-0.64

Correlation Coefficient

Broadcom  Treasury Yield

Excellent diversification

The 3 months correlation between Broadcom and Treasury is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Broadcom and Treasury Yield 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Yield 5 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 Treasury Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Yield 5 has no effect on the direction of Broadcom i.e., Broadcom and Treasury Yield go up and down completely randomly.

Pair Corralation between Broadcom and Treasury Yield

Given the investment horizon of 90 days Broadcom is expected to generate 1.39 times more return on investment than Treasury Yield. However, Broadcom is 1.39 times more volatile than Treasury Yield 5. It trades about 0.27 of its potential returns per unit of risk. Treasury Yield 5 is currently generating about -0.1 per unit of risk. If you would invest  23,157  in Broadcom on May 14, 2025 and sell it today you would earn a total of  8,126  from holding Broadcom or generate 35.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Broadcom  vs.  Treasury Yield 5

Pair Trading with Broadcom and Treasury Yield

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

The idea behind Broadcom and Treasury Yield 5 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..