Correlation Between Guaranty Trust and Prudential Plc
Can any of the company-specific risk be diversified away by investing in both Guaranty Trust 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 Guaranty Trust and Prudential Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guaranty Trust Holding and Prudential plc, you can compare the effects of market volatilities on Guaranty Trust 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 Guaranty Trust with a short position of Prudential Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guaranty Trust and Prudential Plc.
Diversification Opportunities for Guaranty Trust and Prudential Plc
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guaranty and Prudential is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Guaranty Trust Holding and Prudential plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential plc and Guaranty Trust 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 Guaranty Trust Holding 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 Guaranty Trust i.e., Guaranty Trust and Prudential Plc go up and down completely randomly.
Pair Corralation between Guaranty Trust and Prudential Plc
Assuming the 90 days trading horizon Guaranty Trust Holding is expected to generate 1.76 times more return on investment than Prudential Plc. However, Guaranty Trust is 1.76 times more volatile than Prudential plc. It trades about 0.0 of its potential returns per unit of risk. Prudential plc is currently generating about -0.06 per unit of risk. If you would invest 240.00 in Guaranty Trust Holding on September 2, 2024 and sell it today you would lose (55.00) from holding Guaranty Trust Holding or give up 22.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Guaranty Trust Holding vs. Prudential plc
Performance |
| Timeline |
| Guaranty Trust Holding |
| Prudential plc |
Guaranty Trust and Prudential Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guaranty Trust and Prudential Plc
The main advantage of trading using opposite Guaranty Trust and Prudential Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guaranty Trust 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.| Guaranty Trust vs. Aeorema Communications Plc | Guaranty Trust vs. Cairo Communication SpA | Guaranty Trust vs. Take Two Interactive Software | Guaranty Trust vs. Impax Asset Management |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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