Correlation Between Broadway Financial and Carver Bancorp

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

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

Diversification Opportunities for Broadway Financial and Carver Bancorp

0.79

Correlation Coefficient

Broadway Financial  Carver Bancorp

Poor diversification

The 3 months correlation between Broadway and Carver is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Broadway Financial and Carver Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carver Bancorp and Broadway Financial 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 Broadway Financial are associated (or correlated) with Carver Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carver Bancorp has no effect on the direction of Broadway Financial i.e., Broadway Financial and Carver Bancorp go up and down completely randomly.

Pair Corralation between Broadway Financial and Carver Bancorp

Given the investment horizon of 90 days Broadway Financial is expected to generate 1.86 times less return on investment than Carver Bancorp. But when comparing it to its historical volatility, Broadway Financial is 2.63 times less risky than Carver Bancorp. It trades about 0.16 of its potential returns per unit of risk. Carver Bancorp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  141.00  in Carver Bancorp on May 7, 2025 and sell it today you would earn a total of  56.00  from holding Carver Bancorp or generate 39.72% return on investment over 90 days.

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

Broadway Financial  vs.  Carver Bancorp

Broadway Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Broadway Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Broadway Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Carver Bancorp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Carver Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Carver Bancorp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broadway Financial and Carver Bancorp

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

The idea behind Broadway Financial and Carver Bancorp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.