Correlation Between Prudential Plc and GlobalData PLC
Can any of the company-specific risk be diversified away by investing in both Prudential Plc and GlobalData PLC 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 GlobalData PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential plc and GlobalData PLC, you can compare the effects of market volatilities on Prudential Plc and GlobalData PLC 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 GlobalData PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Plc and GlobalData PLC.
Diversification Opportunities for Prudential Plc and GlobalData PLC
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and GlobalData is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Prudential plc and GlobalData PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalData PLC 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 GlobalData PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalData PLC has no effect on the direction of Prudential Plc i.e., Prudential Plc and GlobalData PLC go up and down completely randomly.
Pair Corralation between Prudential Plc and GlobalData PLC
Assuming the 90 days trading horizon Prudential plc is expected to generate 1.17 times more return on investment than GlobalData PLC. However, Prudential Plc is 1.17 times more volatile than GlobalData PLC. It trades about 0.01 of its potential returns per unit of risk. GlobalData PLC is currently generating about -0.06 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. GlobalData PLC
Performance |
| Timeline |
| Prudential plc |
| GlobalData PLC |
Prudential Plc and GlobalData PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Plc and GlobalData PLC
The main advantage of trading using opposite Prudential Plc and GlobalData PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Plc position performs unexpectedly, GlobalData PLC 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 GlobalData PLC will offset losses from the drop in GlobalData PLC'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 |
| GlobalData PLC vs. Catalyst Media Group | GlobalData PLC vs. CATLIN GROUP | GlobalData PLC vs. Magnora ASA | GlobalData PLC vs. RTW Venture Fund |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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