Correlation Between Prudential Financial and Argo Group
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and Argo Group 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 Prudential Financial and Argo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and Argo Group Limited, you can compare the effects of market volatilities on Prudential Financial and Argo Group 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 Prudential Financial with a short position of Argo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and Argo Group.
Diversification Opportunities for Prudential Financial and Argo Group
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and Argo is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and Argo Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group Limited and Prudential 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 Prudential Financial are associated (or correlated) with Argo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Group Limited has no effect on the direction of Prudential Financial i.e., Prudential Financial and Argo Group go up and down completely randomly.
Pair Corralation between Prudential Financial and Argo Group
Assuming the 90 days trading horizon Prudential Financial is expected to under-perform the Argo Group. But the stock apears to be less risky and, when comparing its historical volatility, Prudential Financial is 2.92 times less risky than Argo Group. The stock trades about -0.18 of its potential returns per unit of risk. The Argo Group Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 450.00 in Argo Group Limited on November 27, 2024 and sell it today you would earn a total of 75.00 from holding Argo Group Limited or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Financial vs. Argo Group Limited
Performance |
| Timeline |
| Prudential Financial |
| Argo Group Limited |
Prudential Financial and Argo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and Argo Group
The main advantage of trading using opposite Prudential Financial and Argo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, Argo Group 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 Argo Group will offset losses from the drop in Argo Group's long position.| Prudential Financial vs. Jacquet Metal Service | Prudential Financial vs. Vitec Software Group | Prudential Financial vs. Aptitude Software Group | Prudential Financial vs. Blackrock World Mining |
| Argo Group vs. AMG Advanced Metallurgical | Argo Group vs. Teradata Corp | Argo Group vs. Coeur Mining | Argo Group vs. Resolute Mining Limited |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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