Correlation Between Broadcom and Spruce Power

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

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

Diversification Opportunities for Broadcom and Spruce Power

-0.24

Correlation Coefficient

Broadcom  Spruce Power

Very good diversification

The 3 months correlation between Broadcom and Spruce is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Broadcom and Spruce Power Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spruce Power Holding 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 Spruce Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spruce Power Holding has no effect on the direction of Broadcom i.e., Broadcom and Spruce Power go up and down completely randomly.

Pair Corralation between Broadcom and Spruce Power

Given the investment horizon of 90 days Broadcom is expected to generate 0.46 times more return on investment than Spruce Power. However, Broadcom is 2.19 times less risky than Spruce Power. It trades about 0.31 of its potential returns per unit of risk. Spruce Power Holding is currently generating about -0.09 per unit of risk. If you would invest  20,771  in Broadcom on May 9, 2025 and sell it today you would earn a total of  9,605  from holding Broadcom or generate 46.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Broadcom  vs.  Spruce Power Holding

Broadcom

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Broadcom displayed solid returns over the last few months and may actually be approaching a breakup point.

Spruce Power Holding

Risk-Adjusted Performance

Weakest

Over the last 90 days Spruce Power Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Broadcom and Spruce Power

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

The idea behind Broadcom and Spruce Power Holding 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.