Correlation Between Prudential Financial and T.J. Maxx
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and T.J. Maxx 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 T.J. Maxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and The TJX Companies, you can compare the effects of market volatilities on Prudential Financial and T.J. Maxx 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 T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and T.J. Maxx.
Diversification Opportunities for Prudential Financial and T.J. Maxx
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and T.J. is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Prudential Financial i.e., Prudential Financial and T.J. Maxx go up and down completely randomly.
Pair Corralation between Prudential Financial and T.J. Maxx
Assuming the 90 days trading horizon Prudential Financial is expected to generate 3.9 times less return on investment than T.J. Maxx. But when comparing it to its historical volatility, Prudential Financial is 11.6 times less risky than T.J. Maxx. It trades about 0.13 of its potential returns per unit of risk. The TJX Companies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 246,176 in The TJX Companies on September 12, 2024 and sell it today you would earn a total of 10,226 from holding The TJX Companies or generate 4.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Prudential Financial vs. The TJX Companies
Performance |
| Timeline |
| Prudential Financial |
| TJX Companies |
Prudential Financial and T.J. Maxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and T.J. Maxx
The main advantage of trading using opposite Prudential Financial and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.| Prudential Financial vs. FibraHotel | Prudential Financial vs. Lloyds Banking Group | Prudential Financial vs. Hoteles City Express | Prudential Financial vs. Martin Marietta Materials |
| T.J. Maxx vs. Lloyds Banking Group | T.J. Maxx vs. Verizon Communications | T.J. Maxx vs. Applied Materials | T.J. Maxx vs. Grupo Carso SAB |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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