Correlation Between Prudential Financial and ATT
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and ATT 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 ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and ATT Inc, you can compare the effects of market volatilities on Prudential Financial and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and ATT.
Diversification Opportunities for Prudential Financial and ATT
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and ATT is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 are associated (or correlated) with ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Prudential Financial i.e., Prudential Financial and ATT go up and down completely randomly.
Pair Corralation between Prudential Financial and ATT
Considering the 90-day investment horizon Prudential Financial is expected to generate 1.13 times less return on investment than ATT. But when comparing it to its historical volatility, Prudential Financial is 1.33 times less risky than ATT. It trades about 0.05 of its potential returns per unit of risk. ATT Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,044 in ATT Inc on August 24, 2024 and sell it today you would earn a total of 352.00 from holding ATT Inc or generate 17.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Financial vs. ATT Inc
Performance |
| Timeline |
| Prudential Financial |
| ATT Inc |
Prudential Financial and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and ATT
The main advantage of trading using opposite Prudential Financial and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.| Prudential Financial vs. ATT Inc ELKS | Prudential Financial vs. ATT Inc | Prudential Financial vs. Southern Co | Prudential Financial vs. Duke Energy Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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