Correlation Between Marfrig Global and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Marfrig Global 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 Marfrig Global and Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marfrig Global Foods and Prudential Financial, you can compare the effects of market volatilities on Marfrig Global 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 Marfrig Global with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Prudential Financial.
Diversification Opportunities for Marfrig Global and Prudential Financial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marfrig and Prudential is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Marfrig Global 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 Marfrig Global Foods 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 Marfrig Global i.e., Marfrig Global and Prudential Financial go up and down completely randomly.
Pair Corralation between Marfrig Global and Prudential Financial
Assuming the 90 days trading horizon Marfrig Global Foods is expected to generate 1.91 times more return on investment than Prudential Financial. However, Marfrig Global is 1.91 times more volatile than Prudential Financial. It trades about 0.14 of its potential returns per unit of risk. Prudential Financial is currently generating about 0.1 per unit of risk. If you would invest 1,163 in Marfrig Global Foods on August 26, 2024 and sell it today you would earn a total of 657.00 from holding Marfrig Global Foods or generate 56.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marfrig Global Foods vs. Prudential Financial
Performance |
| Timeline |
| Marfrig Global Foods |
| Prudential Financial |
Marfrig Global and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and Prudential Financial
The main advantage of trading using opposite Marfrig Global and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global 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.| Marfrig Global vs. Minerva SA | Marfrig Global vs. BRF SA | Marfrig Global vs. Companhia Siderrgica Nacional | Marfrig Global vs. Cyrela Brazil Realty |
| Prudential Financial vs. Fras le SA | Prudential Financial vs. Clave Indices De | Prudential Financial vs. BTG Pactual Logstica | Prudential Financial vs. Telefonaktiebolaget LM Ericsson |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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