Correlation Between CAP LEASE and Prudential Plc
Can any of the company-specific risk be diversified away by investing in both CAP LEASE and Prudential Plc 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 CAP LEASE and Prudential Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAP LEASE AVIATION and Prudential plc, you can compare the effects of market volatilities on CAP LEASE and Prudential Plc 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 CAP LEASE with a short position of Prudential Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAP LEASE and Prudential Plc.
Diversification Opportunities for CAP LEASE and Prudential Plc
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between CAP and Prudential is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION and Prudential plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential plc and CAP LEASE 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 CAP LEASE AVIATION are associated (or correlated) with Prudential Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential plc has no effect on the direction of CAP LEASE i.e., CAP LEASE and Prudential Plc go up and down completely randomly.
Pair Corralation between CAP LEASE and Prudential Plc
Assuming the 90 days trading horizon CAP LEASE AVIATION is expected to under-perform the Prudential Plc. In addition to that, CAP LEASE is 1.01 times more volatile than Prudential plc. It trades about -0.19 of its total potential returns per unit of risk. Prudential plc is currently generating about -0.01 per unit of volatility. If you would invest 65,000 in Prudential plc on September 5, 2024 and sell it today you would lose (760.00) from holding Prudential plc or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAP LEASE AVIATION vs. Prudential plc
Performance |
| Timeline |
| CAP LEASE AVIATION |
| Prudential plc |
CAP LEASE and Prudential Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAP LEASE and Prudential Plc
The main advantage of trading using opposite CAP LEASE and Prudential Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAP LEASE position performs unexpectedly, Prudential Plc 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 Plc will offset losses from the drop in Prudential Plc's long position.| CAP LEASE vs. Antofagasta PLC | CAP LEASE vs. Atalaya Mining | CAP LEASE vs. Ferrexpo PLC | CAP LEASE vs. Amaroq Minerals |
| Prudential Plc vs. Molson Coors Beverage | Prudential Plc vs. Eastinco Mining Exploration | Prudential Plc vs. iShares Physical Silver | Prudential Plc vs. Young Cos Brewery |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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