Correlation Between Prudential Financial and Life Insurance
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and Life Insurance 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 Life Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and Life Insurance, you can compare the effects of market volatilities on Prudential Financial and Life Insurance 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 Life Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and Life Insurance.
Diversification Opportunities for Prudential Financial and Life Insurance
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prudential and Life is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Insurance 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 Life Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Insurance has no effect on the direction of Prudential Financial i.e., Prudential Financial and Life Insurance go up and down completely randomly.
Pair Corralation between Prudential Financial and Life Insurance
Considering the 90-day investment horizon Prudential Financial is expected to generate 2.2 times less return on investment than Life Insurance. In addition to that, Prudential Financial is 1.19 times more volatile than Life Insurance. It trades about 0.11 of its total potential returns per unit of risk. Life Insurance is currently generating about 0.29 per unit of volatility. If you would invest 1,400 in Life Insurance on August 30, 2024 and sell it today you would earn a total of 150.00 from holding Life Insurance or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Financial vs. Life Insurance
Performance |
| Timeline |
| Prudential Financial |
| Life Insurance |
Prudential Financial and Life Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and Life Insurance
The main advantage of trading using opposite Prudential Financial and Life Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, Life Insurance 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 Life Insurance will offset losses from the drop in Life Insurance's long position.| Prudential Financial vs. Lincoln National | Prudential Financial vs. Aflac Incorporated | Prudential Financial vs. Brighthouse Financial | Prudential Financial vs. Unum Group |
| Life Insurance vs. Axalta Coating Systems | Life Insurance vs. Eastman Chemical | Life Insurance vs. Warner Music Group | Life Insurance vs. Helmerich and Payne |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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