Correlation Between Prudential Financial and FG Annuities
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and FG Annuities 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 FG Annuities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and FG Annuities Life, you can compare the effects of market volatilities on Prudential Financial and FG Annuities 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 FG Annuities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and FG Annuities.
Diversification Opportunities for Prudential Financial and FG Annuities
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and FG Annuities is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and FG Annuities Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Annuities Life 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 FG Annuities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Annuities Life has no effect on the direction of Prudential Financial i.e., Prudential Financial and FG Annuities go up and down completely randomly.
Pair Corralation between Prudential Financial and FG Annuities
Considering the 90-day investment horizon Prudential Financial is expected to generate 4.31 times less return on investment than FG Annuities. But when comparing it to its historical volatility, Prudential Financial is 2.02 times less risky than FG Annuities. It trades about 0.09 of its potential returns per unit of risk. FG Annuities Life is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,166 in FG Annuities Life on August 28, 2024 and sell it today you would earn a total of 677.00 from holding FG Annuities Life or generate 16.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Financial vs. FG Annuities Life
Performance |
| Timeline |
| Prudential Financial |
| FG Annuities Life |
Prudential Financial and FG Annuities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and FG Annuities
The main advantage of trading using opposite Prudential Financial and FG Annuities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, FG Annuities 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 FG Annuities will offset losses from the drop in FG Annuities' long position.| Prudential Financial vs. Morningstar Unconstrained Allocation | Prudential Financial vs. Via Renewables | Prudential Financial vs. Sitka Gold Corp | Prudential Financial vs. MSCI ACWI exAUCONSUMER |
| FG Annuities vs. Morningstar Unconstrained Allocation | FG Annuities vs. Via Renewables | FG Annuities vs. Sitka Gold Corp | FG Annuities vs. MSCI ACWI exAUCONSUMER |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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