Correlation Between Prudential Financial and Cornish Metals
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and Cornish Metals 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 Cornish Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and Cornish Metals, you can compare the effects of market volatilities on Prudential Financial and Cornish Metals 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 Cornish Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and Cornish Metals.
Diversification Opportunities for Prudential Financial and Cornish Metals
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prudential and Cornish is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals 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 Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of Prudential Financial i.e., Prudential Financial and Cornish Metals go up and down completely randomly.
Pair Corralation between Prudential Financial and Cornish Metals
Assuming the 90 days trading horizon Prudential Financial is expected to generate 2.18 times less return on investment than Cornish Metals. But when comparing it to its historical volatility, Prudential Financial is 2.05 times less risky than Cornish Metals. It trades about 0.1 of its potential returns per unit of risk. Cornish Metals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 730.00 in Cornish Metals on August 28, 2024 and sell it today you would earn a total of 160.00 from holding Cornish Metals or generate 21.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Financial vs. Cornish Metals
Performance |
| Timeline |
| Prudential Financial |
| Cornish Metals |
Prudential Financial and Cornish Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and Cornish Metals
The main advantage of trading using opposite Prudential Financial and Cornish Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, Cornish Metals 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 Cornish Metals will offset losses from the drop in Cornish Metals' long position.| Prudential Financial vs. Samsung Electronics Co | Prudential Financial vs. Samsung Electronics Co | Prudential Financial vs. Hyundai Motor | Prudential Financial vs. Toyota Motor Corp |
| Cornish Metals vs. Givaudan SA | Cornish Metals vs. Antofagasta PLC | Cornish Metals vs. Centamin PLC | Cornish Metals vs. Atalaya Mining |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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