Correlation Between Genworth Financial and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Genworth 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 Genworth 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 Genworth Financial and Prudential Financial, you can compare the effects of market volatilities on Genworth 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 Genworth Financial with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genworth Financial and Prudential Financial.
Diversification Opportunities for Genworth Financial and Prudential Financial
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Genworth and Prudential is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Genworth Financial and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Genworth 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 Genworth 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 Genworth Financial i.e., Genworth Financial and Prudential Financial go up and down completely randomly.
Pair Corralation between Genworth Financial and Prudential Financial
Considering the 90-day investment horizon Genworth Financial is expected to generate 1.13 times more return on investment than Prudential Financial. However, Genworth Financial is 1.13 times more volatile than Prudential Financial. It trades about 0.28 of its potential returns per unit of risk. Prudential Financial is currently generating about 0.11 per unit of risk. If you would invest 682.00 in Genworth Financial on August 30, 2024 and sell it today you would earn a total of 97.00 from holding Genworth Financial or generate 14.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genworth Financial vs. Prudential Financial
Performance |
| Timeline |
| Genworth Financial |
| Prudential Financial |
Genworth Financial and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genworth Financial and Prudential Financial
The main advantage of trading using opposite Genworth Financial and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genworth 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.| Genworth Financial vs. MetLife Preferred Stock | Genworth Financial vs. Prudential Public Limited | Genworth Financial vs. Primerica | Genworth Financial vs. CNO Financial Group |
| Prudential Financial vs. Lincoln National | Prudential Financial vs. Aflac Incorporated | Prudential Financial vs. Brighthouse Financial | Prudential Financial vs. Unum Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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