Correlation Between Barings Us and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Barings Us 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 Barings Us and Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings High Yield and Prudential Financial Services, you can compare the effects of market volatilities on Barings Us 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 Barings Us with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Prudential Financial.
Diversification Opportunities for Barings Us and Prudential Financial
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Prudential is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Prudential Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Barings Us 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 Barings High Yield 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 Barings Us i.e., Barings Us and Prudential Financial go up and down completely randomly.
Pair Corralation between Barings Us and Prudential Financial
Assuming the 90 days horizon Barings Us is expected to generate 3.43 times less return on investment than Prudential Financial. But when comparing it to its historical volatility, Barings High Yield is 7.29 times less risky than Prudential Financial. It trades about 0.09 of its potential returns per unit of risk. Prudential Financial Services is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,310 in Prudential Financial Services on October 24, 2024 and sell it today you would earn a total of 94.00 from holding Prudential Financial Services or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings High Yield vs. Prudential Financial Services
Performance |
| Timeline |
| Barings High Yield |
| Prudential Financial |
Barings Us and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and Prudential Financial
The main advantage of trading using opposite Barings Us and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us 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.| Barings Us vs. Federated Hermes Conservative | Barings Us vs. Guggenheim Diversified Income | Barings Us vs. Putnam Diversified Income | Barings Us vs. Wealthbuilder Conservative Allocation |
| Prudential Financial vs. Barings High Yield | Prudential Financial vs. Old Westbury Municipal | Prudential Financial vs. Federated High Yield | Prudential Financial vs. Transamerica Intermediate Muni |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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