Correlation Between Prudential Financial and CNO Financial
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and CNO 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 CNO 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 CNO Financial Group, you can compare the effects of market volatilities on Prudential Financial and CNO 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 CNO Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and CNO Financial.
Diversification Opportunities for Prudential Financial and CNO Financial
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prudential and CNO is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and CNO Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNO Financial Group 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 CNO Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNO Financial Group has no effect on the direction of Prudential Financial i.e., Prudential Financial and CNO Financial go up and down completely randomly.
Pair Corralation between Prudential Financial and CNO Financial
Considering the 90-day investment horizon Prudential Financial is expected to generate 3.25 times less return on investment than CNO Financial. But when comparing it to its historical volatility, Prudential Financial is 1.39 times less risky than CNO Financial. It trades about 0.11 of its potential returns per unit of risk. CNO Financial Group is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,468 in CNO Financial Group on August 30, 2024 and sell it today you would earn a total of 548.00 from holding CNO Financial Group or generate 15.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Financial vs. CNO Financial Group
Performance |
| Timeline |
| Prudential Financial |
| CNO Financial Group |
Prudential Financial and CNO Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and CNO Financial
The main advantage of trading using opposite Prudential Financial and CNO Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, CNO 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 CNO Financial will offset losses from the drop in CNO Financial's long position.| Prudential Financial vs. Lincoln National | Prudential Financial vs. Aflac Incorporated | Prudential Financial vs. Brighthouse Financial | Prudential Financial vs. Unum Group |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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