Correlation Between Prudential Financial and Brighthouse Financial
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and Brighthouse Financial 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 Brighthouse Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and Brighthouse Financial, you can compare the effects of market volatilities on Prudential Financial and Brighthouse Financial 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 Brighthouse Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and Brighthouse Financial.
Diversification Opportunities for Prudential Financial and Brighthouse Financial
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and Brighthouse is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and Brighthouse Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighthouse Financial 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 Brighthouse Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighthouse Financial has no effect on the direction of Prudential Financial i.e., Prudential Financial and Brighthouse Financial go up and down completely randomly.
Pair Corralation between Prudential Financial and Brighthouse Financial
Considering the 90-day investment horizon Prudential Financial is expected to under-perform the Brighthouse Financial. But the stock apears to be less risky and, when comparing its historical volatility, Prudential Financial is 1.09 times less risky than Brighthouse Financial. The stock trades about -0.12 of its potential returns per unit of risk. The Brighthouse Financial is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 2,227 in Brighthouse Financial on November 9, 2024 and sell it today you would lose (72.00) from holding Brighthouse Financial or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Financial vs. Brighthouse Financial
Performance |
| Timeline |
| Prudential Financial |
| Brighthouse Financial |
Prudential Financial and Brighthouse Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and Brighthouse Financial
The main advantage of trading using opposite Prudential Financial and Brighthouse Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, Brighthouse Financial 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 Brighthouse Financial will offset losses from the drop in Brighthouse Financial's long position.| Prudential Financial vs. Lincoln National | Prudential Financial vs. Aflac Incorporated | Prudential Financial vs. Brighthouse Financial | Prudential Financial vs. Unum Group |
| Brighthouse Financial vs. MetLife Preferred Stock | Brighthouse Financial vs. Jackson Financial | Brighthouse Financial vs. MetLife Preferred Stock | Brighthouse Financial vs. Brighthouse 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |