Correlation Between Prudential Financial and Affiliated Managers
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and Affiliated Managers 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 Prudential Financial and Affiliated Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial 4125 and Affiliated Managers Group, you can compare the effects of market volatilities on Prudential Financial and Affiliated Managers 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 Prudential Financial with a short position of Affiliated Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and Affiliated Managers.
Diversification Opportunities for Prudential Financial and Affiliated Managers
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and Affiliated is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial 4125 and Affiliated Managers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers and Prudential Financial 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 Prudential Financial 4125 are associated (or correlated) with Affiliated Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Managers has no effect on the direction of Prudential Financial i.e., Prudential Financial and Affiliated Managers go up and down completely randomly.
Pair Corralation between Prudential Financial and Affiliated Managers
Considering the 90-day investment horizon Prudential Financial is expected to generate 1.03 times less return on investment than Affiliated Managers. But when comparing it to its historical volatility, Prudential Financial 4125 is 1.2 times less risky than Affiliated Managers. It trades about 0.02 of its potential returns per unit of risk. Affiliated Managers Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,199 in Affiliated Managers Group on August 27, 2024 and sell it today you would earn a total of 181.00 from holding Affiliated Managers Group or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Financial 4125 vs. Affiliated Managers Group
Performance |
| Timeline |
| Prudential Financial 4125 |
| Affiliated Managers |
Prudential Financial and Affiliated Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and Affiliated Managers
The main advantage of trading using opposite Prudential Financial and Affiliated Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, Affiliated Managers 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 Affiliated Managers will offset losses from the drop in Affiliated Managers' long position.| Prudential Financial vs. Southern Company Series | Prudential Financial vs. Credit Enhanced Corts | Prudential Financial vs. Structured Products Corp | Prudential Financial vs. Affiliated Managers Group |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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