Correlation Between Prudential Health and First Eagle
Can any of the company-specific risk be diversified away by investing in both Prudential Health and First Eagle 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 Health and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Health Sciences and First Eagle Overseas, you can compare the effects of market volatilities on Prudential Health and First Eagle 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 Health with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Health and First Eagle.
Diversification Opportunities for Prudential Health and First Eagle
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Prudential and First is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Health Sciences and First Eagle Overseas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Overseas and Prudential Health 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 Health Sciences are associated (or correlated) with First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Overseas has no effect on the direction of Prudential Health i.e., Prudential Health and First Eagle go up and down completely randomly.
Pair Corralation between Prudential Health and First Eagle
Assuming the 90 days horizon Prudential Health Sciences is expected to generate 0.72 times more return on investment than First Eagle. However, Prudential Health Sciences is 1.39 times less risky than First Eagle. It trades about -0.13 of its potential returns per unit of risk. First Eagle Overseas is currently generating about -0.19 per unit of risk. If you would invest 4,243 in Prudential Health Sciences on September 12, 2024 and sell it today you would lose (142.00) from holding Prudential Health Sciences or give up 3.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Health Sciences vs. First Eagle Overseas
Performance |
| Timeline |
| Prudential Health |
| First Eagle Overseas |
Prudential Health and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Health and First Eagle
The main advantage of trading using opposite Prudential Health and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Health position performs unexpectedly, First Eagle 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 First Eagle will offset losses from the drop in First Eagle's long position.| Prudential Health vs. Sp Midcap Index | Prudential Health vs. Extended Market Index | Prudential Health vs. Ab All Market | Prudential Health vs. Aqr Long Short Equity |
| First Eagle vs. Delaware Healthcare Fund | First Eagle vs. Hartford Healthcare Hls | First Eagle vs. Vanguard Health Care | First Eagle vs. Prudential Health Sciences |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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