Correlation Between Global Technology and Prudential Health
Can any of the company-specific risk be diversified away by investing in both Global Technology and Prudential Health 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 Global Technology and Prudential Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Technology Portfolio and Prudential Health Sciences, you can compare the effects of market volatilities on Global Technology and Prudential Health 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 Global Technology with a short position of Prudential Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Technology and Prudential Health.
Diversification Opportunities for Global Technology and Prudential Health
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Prudential is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Global Technology Portfolio and Prudential Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Health and Global Technology 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 Global Technology Portfolio are associated (or correlated) with Prudential Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Health has no effect on the direction of Global Technology i.e., Global Technology and Prudential Health go up and down completely randomly.
Pair Corralation between Global Technology and Prudential Health
Assuming the 90 days horizon Global Technology Portfolio is expected to generate 0.89 times more return on investment than Prudential Health. However, Global Technology Portfolio is 1.12 times less risky than Prudential Health. It trades about 0.09 of its potential returns per unit of risk. Prudential Health Sciences is currently generating about -0.02 per unit of risk. If you would invest 2,149 in Global Technology Portfolio on September 14, 2024 and sell it today you would earn a total of 41.00 from holding Global Technology Portfolio or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Technology Portfolio vs. Prudential Health Sciences
Performance |
| Timeline |
| Global Technology |
| Prudential Health |
Global Technology and Prudential Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Technology and Prudential Health
The main advantage of trading using opposite Global Technology and Prudential Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Technology position performs unexpectedly, Prudential Health 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 Health will offset losses from the drop in Prudential Health's long position.| Global Technology vs. Ftfa Franklin Templeton Growth | Global Technology vs. Vy Baron Growth | Global Technology vs. Qs Defensive Growth | Global Technology vs. L Abbett Growth |
| Prudential Health vs. Hennessy Technology Fund | Prudential Health vs. Biotechnology Ultrasector Profund | Prudential Health vs. Towpath Technology | Prudential Health vs. Global Technology Portfolio |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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