Correlation Between Prudential Plc and Batm Advanced
Can any of the company-specific risk be diversified away by investing in both Prudential Plc and Batm Advanced 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 Plc and Batm Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential plc and Batm Advanced Communications, you can compare the effects of market volatilities on Prudential Plc and Batm Advanced 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 Plc with a short position of Batm Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Plc and Batm Advanced.
Diversification Opportunities for Prudential Plc and Batm Advanced
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Prudential and Batm is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Prudential plc and Batm Advanced Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batm Advanced Commun and Prudential Plc 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 plc are associated (or correlated) with Batm Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batm Advanced Commun has no effect on the direction of Prudential Plc i.e., Prudential Plc and Batm Advanced go up and down completely randomly.
Pair Corralation between Prudential Plc and Batm Advanced
Assuming the 90 days trading horizon Prudential plc is expected to generate 0.61 times more return on investment than Batm Advanced. However, Prudential plc is 1.63 times less risky than Batm Advanced. It trades about 0.01 of its potential returns per unit of risk. Batm Advanced Communications is currently generating about -0.09 per unit of risk. If you would invest 63,863 in Prudential plc on September 3, 2024 and sell it today you would earn a total of 317.00 from holding Prudential plc or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential plc vs. Batm Advanced Communications
Performance |
| Timeline |
| Prudential plc |
| Batm Advanced Commun |
Prudential Plc and Batm Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Plc and Batm Advanced
The main advantage of trading using opposite Prudential Plc and Batm Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Plc position performs unexpectedly, Batm Advanced 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 Batm Advanced will offset losses from the drop in Batm Advanced's long position.| Prudential Plc vs. Automatic Data Processing | Prudential Plc vs. Orient Telecoms | Prudential Plc vs. Batm Advanced Communications | Prudential Plc vs. GlobalData PLC |
| Batm Advanced vs. Ecclesiastical Insurance Office | Batm Advanced vs. Bank of Ireland | Batm Advanced vs. Erste Group Bank | Batm Advanced vs. Fortune Brands Home |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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