Correlation Between Prudential Financial and American Equity
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and American Equity 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 American Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and American Equity Investment, you can compare the effects of market volatilities on Prudential Financial and American Equity 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 American Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and American Equity.
Diversification Opportunities for Prudential Financial and American Equity
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and American is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and American Equity Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Equity Inve 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 American Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Equity Inve has no effect on the direction of Prudential Financial i.e., Prudential Financial and American Equity go up and down completely randomly.
Pair Corralation between Prudential Financial and American Equity
If you would invest 12,536 in Prudential Financial on August 31, 2024 and sell it today you would earn a total of 416.00 from holding Prudential Financial or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Prudential Financial vs. American Equity Investment
Performance |
| Timeline |
| Prudential Financial |
| American Equity Inve |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Prudential Financial and American Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and American Equity
The main advantage of trading using opposite Prudential Financial and American Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, American Equity 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 American Equity will offset losses from the drop in American Equity's long position.| Prudential Financial vs. Lincoln National | Prudential Financial vs. Aflac Incorporated | Prudential Financial vs. Brighthouse Financial | Prudential Financial vs. Unum Group |
| American Equity vs. MetLife Preferred Stock | American Equity vs. Prudential Public Limited | American Equity vs. MetLife Preferred Stock | American Equity vs. Jackson Financial |
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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