Correlation Between NYSE Composite and Prudential Utility
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Prudential Utility 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 NYSE Composite and Prudential Utility into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Prudential Utility Fund, you can compare the effects of market volatilities on NYSE Composite and Prudential Utility 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 NYSE Composite with a short position of Prudential Utility. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Prudential Utility.
Diversification Opportunities for NYSE Composite and Prudential Utility
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Prudential is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Prudential Utility Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Utility and NYSE Composite 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 NYSE Composite are associated (or correlated) with Prudential Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Utility has no effect on the direction of NYSE Composite i.e., NYSE Composite and Prudential Utility go up and down completely randomly.
Pair Corralation between NYSE Composite and Prudential Utility
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.07 times less return on investment than Prudential Utility. But when comparing it to its historical volatility, NYSE Composite is 1.8 times less risky than Prudential Utility. It trades about 0.42 of its potential returns per unit of risk. Prudential Utility Fund is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,665 in Prudential Utility Fund on September 1, 2024 and sell it today you would earn a total of 99.00 from holding Prudential Utility Fund or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Prudential Utility Fund
Performance |
| Timeline |
NYSE Composite and Prudential Utility Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Prudential Utility Fund
Pair trading matchups for Prudential Utility
Pair Trading with NYSE Composite and Prudential Utility
The main advantage of trading using opposite NYSE Composite and Prudential Utility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Prudential Utility 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 Utility will offset losses from the drop in Prudential Utility's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Prudential Utility vs. Dominion Energy | Prudential Utility vs. Atlantica Sustainable Infrastructure | Prudential Utility vs. Consolidated Edison | Prudential Utility vs. Eversource Energy |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |