Correlation Between Prudential Health and Hartford Healthcare
Can any of the company-specific risk be diversified away by investing in both Prudential Health and Hartford Healthcare 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 Hartford Healthcare 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 Hartford Healthcare Hls, you can compare the effects of market volatilities on Prudential Health and Hartford Healthcare 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 Hartford Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Health and Hartford Healthcare.
Diversification Opportunities for Prudential Health and Hartford Healthcare
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prudential and Hartford is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Health Sciences and Hartford Healthcare Hls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Healthcare Hls 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 Hartford Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Healthcare Hls has no effect on the direction of Prudential Health i.e., Prudential Health and Hartford Healthcare go up and down completely randomly.
Pair Corralation between Prudential Health and Hartford Healthcare
Assuming the 90 days horizon Prudential Health Sciences is expected to generate 1.21 times more return on investment than Hartford Healthcare. However, Prudential Health is 1.21 times more volatile than Hartford Healthcare Hls. It trades about -0.13 of its potential returns per unit of risk. Hartford Healthcare Hls is currently generating about -0.22 per unit of risk. If you would invest 4,158 in Prudential Health Sciences on August 28, 2024 and sell it today you would lose (135.00) from holding Prudential Health Sciences or give up 3.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Health Sciences vs. Hartford Healthcare Hls
Performance |
| Timeline |
| Prudential Health |
| Hartford Healthcare Hls |
Prudential Health and Hartford Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Health and Hartford Healthcare
The main advantage of trading using opposite Prudential Health and Hartford Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Health position performs unexpectedly, Hartford Healthcare 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 Hartford Healthcare will offset losses from the drop in Hartford Healthcare's long position.| Prudential Health vs. Legg Mason Partners | Prudential Health vs. Pnc Emerging Markets | Prudential Health vs. T Rowe Price | Prudential Health vs. Ep Emerging Markets |
| Hartford Healthcare vs. The Hartford Growth | Hartford Healthcare vs. The Hartford Growth | Hartford Healthcare vs. The Hartford Growth | Hartford Healthcare vs. The Hartford Growth |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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