Correlation Between CNO Financial and Prudential PLC
Can any of the company-specific risk be diversified away by investing in both CNO Financial 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 CNO Financial and Prudential PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNO Financial Group and Prudential PLC ADR, you can compare the effects of market volatilities on CNO Financial 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 CNO Financial with a short position of Prudential PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNO Financial and Prudential PLC.
Diversification Opportunities for CNO Financial and Prudential PLC
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between CNO and Prudential is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding CNO Financial Group and Prudential PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential PLC ADR and CNO 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 CNO Financial Group 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 ADR has no effect on the direction of CNO Financial i.e., CNO Financial and Prudential PLC go up and down completely randomly.
Pair Corralation between CNO Financial and Prudential PLC
Considering the 90-day investment horizon CNO Financial Group is expected to generate 0.72 times more return on investment than Prudential PLC. However, CNO Financial Group is 1.39 times less risky than Prudential PLC. It trades about 0.21 of its potential returns per unit of risk. Prudential PLC ADR is currently generating about -0.02 per unit of risk. If you would invest 3,697 in CNO Financial Group on October 22, 2024 and sell it today you would earn a total of 181.00 from holding CNO Financial Group or generate 4.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNO Financial Group vs. Prudential PLC ADR
Performance |
| Timeline |
| CNO Financial Group |
| Prudential PLC ADR |
CNO Financial and Prudential PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNO Financial and Prudential PLC
The main advantage of trading using opposite CNO Financial and Prudential PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNO Financial 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.| CNO Financial vs. MetLife Preferred Stock | CNO Financial vs. FG Annuities Life | CNO Financial vs. Prudential PLC ADR | CNO Financial vs. MetLife Preferred Stock |
| Prudential PLC vs. CNO Financial Group | Prudential PLC vs. Jackson Financial | Prudential PLC vs. MetLife Preferred Stock | Prudential PLC vs. Jackson Financial |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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