Correlation Between Prudential Financial and GMxico Transportes
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and GMxico Transportes 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 GMxico Transportes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and GMxico Transportes SAB, you can compare the effects of market volatilities on Prudential Financial and GMxico Transportes 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 GMxico Transportes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and GMxico Transportes.
Diversification Opportunities for Prudential Financial and GMxico Transportes
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and GMxico is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and GMxico Transportes SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMxico Transportes SAB 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 GMxico Transportes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMxico Transportes SAB has no effect on the direction of Prudential Financial i.e., Prudential Financial and GMxico Transportes go up and down completely randomly.
Pair Corralation between Prudential Financial and GMxico Transportes
Assuming the 90 days trading horizon Prudential Financial is expected to generate 1.0 times more return on investment than GMxico Transportes. However, Prudential Financial is 1.0 times less risky than GMxico Transportes. It trades about 0.02 of its potential returns per unit of risk. GMxico Transportes SAB is currently generating about -0.02 per unit of risk. If you would invest 180,843 in Prudential Financial on August 29, 2024 and sell it today you would earn a total of 20,657 from holding Prudential Financial or generate 11.42% 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. GMxico Transportes SAB
Performance |
| Timeline |
| Prudential Financial |
| GMxico Transportes SAB |
Prudential Financial and GMxico Transportes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and GMxico Transportes
The main advantage of trading using opposite Prudential Financial and GMxico Transportes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, GMxico Transportes 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 GMxico Transportes will offset losses from the drop in GMxico Transportes' long position.| Prudential Financial vs. The Select Sector | Prudential Financial vs. SPDR Series Trust | Prudential Financial vs. FibroGen | Prudential Financial vs. iShares Trust |
| GMxico Transportes vs. Grupo Mxico SAB | GMxico Transportes vs. The Select Sector | GMxico Transportes vs. SPDR Series Trust | GMxico Transportes vs. FibroGen |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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