Correlation Between LESTE FDO and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both LESTE FDO 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 LESTE FDO and Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LESTE FDO INV and Prudential Financial, you can compare the effects of market volatilities on LESTE FDO 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 LESTE FDO with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LESTE FDO and Prudential Financial.
Diversification Opportunities for LESTE FDO and Prudential Financial
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LESTE and Prudential is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding LESTE FDO INV and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and LESTE FDO 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 LESTE FDO INV 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 LESTE FDO i.e., LESTE FDO and Prudential Financial go up and down completely randomly.
Pair Corralation between LESTE FDO and Prudential Financial
Assuming the 90 days trading horizon LESTE FDO INV is expected to under-perform the Prudential Financial. But the fund apears to be less risky and, when comparing its historical volatility, LESTE FDO INV is 1.12 times less risky than Prudential Financial. The fund trades about -0.17 of its potential returns per unit of risk. The Prudential Financial is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 35,866 in Prudential Financial on September 13, 2024 and sell it today you would earn a total of 2,624 from holding Prudential Financial or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LESTE FDO INV vs. Prudential Financial
Performance |
| Timeline |
| LESTE FDO INV |
| Prudential Financial |
LESTE FDO and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LESTE FDO and Prudential Financial
The main advantage of trading using opposite LESTE FDO and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LESTE FDO 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.| LESTE FDO vs. Brio Multiestrategi Fundo | LESTE FDO vs. HEDGE SEED FUNDO | LESTE FDO vs. XP Hoteis Fundo | LESTE FDO vs. EXES FUNDO DE |
| Prudential Financial vs. Fundo Investimento Imobiliario | Prudential Financial vs. LESTE FDO INV | Prudential Financial vs. Fras le SA | Prudential Financial vs. Western Digital |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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