Correlation Between Federal Realty and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Prudential 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 Federal Realty and Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Realty Investment and Prudential Financial, you can compare the effects of market volatilities on Federal Realty and Prudential 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 Federal Realty with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Prudential Financial.
Diversification Opportunities for Federal Realty and Prudential Financial
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and Prudential is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Federal Realty 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 Federal Realty Investment are associated (or correlated) with Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Federal Realty i.e., Federal Realty and Prudential Financial go up and down completely randomly.
Pair Corralation between Federal Realty and Prudential Financial
Assuming the 90 days trading horizon Federal Realty is expected to generate 2.67 times less return on investment than Prudential Financial. But when comparing it to its historical volatility, Federal Realty Investment is 1.39 times less risky than Prudential Financial. It trades about 0.03 of its potential returns per unit of risk. Prudential Financial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9,236 in Prudential Financial on August 27, 2024 and sell it today you would earn a total of 3,598 from holding Prudential Financial or generate 38.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.25% |
| Values | Daily Returns |
Federal Realty Investment vs. Prudential Financial
Performance |
| Timeline |
| Federal Realty Investment |
| Prudential Financial |
Federal Realty and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Prudential Financial
The main advantage of trading using opposite Federal Realty and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Prudential 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| Federal Realty vs. Adriatic Metals | Federal Realty vs. Aeorema Communications Plc | Federal Realty vs. Empire Metals Limited | Federal Realty vs. Gaztransport et Technigaz |
| Prudential Financial vs. FC Investment Trust | Prudential Financial vs. Tatton Asset Management | Prudential Financial vs. Lowland Investment Co | Prudential Financial vs. Federal Realty Investment |
Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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