Correlation Between Ecofin Global and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Ecofin Global 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 Ecofin Global and Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofin Global Utilities and Prudential Financial, you can compare the effects of market volatilities on Ecofin Global 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 Ecofin Global with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofin Global and Prudential Financial.
Diversification Opportunities for Ecofin Global and Prudential Financial
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ecofin and Prudential is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ecofin Global Utilities and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Ecofin Global 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 Ecofin Global Utilities 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 Ecofin Global i.e., Ecofin Global and Prudential Financial go up and down completely randomly.
Pair Corralation between Ecofin Global and Prudential Financial
Assuming the 90 days trading horizon Ecofin Global Utilities is expected to generate 1.68 times more return on investment than Prudential Financial. However, Ecofin Global is 1.68 times more volatile than Prudential Financial. It trades about -0.07 of its potential returns per unit of risk. Prudential Financial is currently generating about -0.21 per unit of risk. If you would invest 18,700 in Ecofin Global Utilities on October 13, 2024 and sell it today you would lose (550.00) from holding Ecofin Global Utilities or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Ecofin Global Utilities vs. Prudential Financial
Performance |
| Timeline |
| Ecofin Global Utilities |
| Prudential Financial |
Ecofin Global and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofin Global and Prudential Financial
The main advantage of trading using opposite Ecofin Global and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofin Global 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.| Ecofin Global vs. FC Investment Trust | Ecofin Global vs. XLMedia PLC | Ecofin Global vs. One Media iP | Ecofin Global vs. Mobius Investment Trust |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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