Correlation Between Prudential Financial and General Dynamics
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and General Dynamics 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 General Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and General Dynamics, you can compare the effects of market volatilities on Prudential Financial and General Dynamics 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 General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and General Dynamics.
Diversification Opportunities for Prudential Financial and General Dynamics
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and General is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics 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 General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics has no effect on the direction of Prudential Financial i.e., Prudential Financial and General Dynamics go up and down completely randomly.
Pair Corralation between Prudential Financial and General Dynamics
Assuming the 90 days trading horizon Prudential Financial is expected to generate 0.28 times more return on investment than General Dynamics. However, Prudential Financial is 3.61 times less risky than General Dynamics. It trades about 0.22 of its potential returns per unit of risk. General Dynamics is currently generating about -0.25 per unit of risk. If you would invest 198,872 in Prudential Financial on September 4, 2024 and sell it today you would earn a total of 2,628 from holding Prudential Financial or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Financial vs. General Dynamics
Performance |
| Timeline |
| Prudential Financial |
| General Dynamics |
Prudential Financial and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and General Dynamics
The main advantage of trading using opposite Prudential Financial and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, General Dynamics 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 General Dynamics will offset losses from the drop in General Dynamics' long position.| Prudential Financial vs. The Select Sector | Prudential Financial vs. Promotora y Operadora | Prudential Financial vs. SPDR Series Trust | Prudential Financial vs. Vanguard World |
| General Dynamics vs. Costco Wholesale | General Dynamics vs. Applied Materials | General Dynamics vs. CVS Health | General Dynamics vs. FibraHotel |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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