Correlation Between Brighthouse Financial and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Brighthouse Financial 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 Brighthouse Financial and Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brighthouse Financial and Prudential Financial, you can compare the effects of market volatilities on Brighthouse Financial 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 Brighthouse Financial with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brighthouse Financial and Prudential Financial.
Diversification Opportunities for Brighthouse Financial and Prudential Financial
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brighthouse and Prudential is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Brighthouse Financial and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Brighthouse 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 Brighthouse Financial 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 Brighthouse Financial i.e., Brighthouse Financial and Prudential Financial go up and down completely randomly.
Pair Corralation between Brighthouse Financial and Prudential Financial
Considering the 90-day investment horizon Brighthouse Financial is expected to generate 1.54 times more return on investment than Prudential Financial. However, Brighthouse Financial is 1.54 times more volatile than Prudential Financial. It trades about 0.14 of its potential returns per unit of risk. Prudential Financial is currently generating about 0.09 per unit of risk. If you would invest 4,878 in Brighthouse Financial on August 28, 2024 and sell it today you would earn a total of 404.00 from holding Brighthouse Financial or generate 8.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brighthouse Financial vs. Prudential Financial
Performance |
| Timeline |
| Brighthouse Financial |
| Prudential Financial |
Brighthouse Financial and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brighthouse Financial and Prudential Financial
The main advantage of trading using opposite Brighthouse Financial and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brighthouse Financial 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.| Brighthouse Financial vs. Prudential Financial | Brighthouse Financial vs. Lincoln National | Brighthouse Financial vs. Aflac Incorporated | Brighthouse Financial vs. Unum Group |
| Prudential Financial vs. Morningstar Unconstrained Allocation | Prudential Financial vs. Via Renewables | Prudential Financial vs. Sitka Gold Corp | Prudential Financial vs. MSCI ACWI exAUCONSUMER |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |