Correlation Between Lincoln National and Prudential Public
Can any of the company-specific risk be diversified away by investing in both Lincoln National and Prudential Public 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 Lincoln National and Prudential Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lincoln National and Prudential Public Limited, you can compare the effects of market volatilities on Lincoln National and Prudential Public 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 Lincoln National with a short position of Prudential Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln National and Prudential Public.
Diversification Opportunities for Lincoln National and Prudential Public
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lincoln and Prudential is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln National and Prudential Public Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Public and Lincoln National 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 Lincoln National are associated (or correlated) with Prudential Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Public has no effect on the direction of Lincoln National i.e., Lincoln National and Prudential Public go up and down completely randomly.
Pair Corralation between Lincoln National and Prudential Public
Considering the 90-day investment horizon Lincoln National is expected to generate 1.7 times more return on investment than Prudential Public. However, Lincoln National is 1.7 times more volatile than Prudential Public Limited. It trades about 0.13 of its potential returns per unit of risk. Prudential Public Limited is currently generating about -0.13 per unit of risk. If you would invest 3,259 in Lincoln National on August 24, 2024 and sell it today you would earn a total of 290.00 from holding Lincoln National or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln National vs. Prudential Public Limited
Performance |
| Timeline |
| Lincoln National |
| Prudential Public |
Lincoln National and Prudential Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln National and Prudential Public
The main advantage of trading using opposite Lincoln National and Prudential Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln National position performs unexpectedly, Prudential Public 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 Public will offset losses from the drop in Prudential Public's long position.| Lincoln National vs. Unum Group | Lincoln National vs. Manulife Financial Corp | Lincoln National vs. Brighthouse Financial | Lincoln National vs. FG Annuities Life |
| Prudential Public vs. Unum Group | Prudential Public vs. Manulife Financial Corp | Prudential Public vs. Brighthouse Financial | Prudential Public vs. FG Annuities Life |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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