Correlation Between Prudential Financial and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and Old Westbury 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 Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial Services and Old Westbury Municipal, you can compare the effects of market volatilities on Prudential Financial and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and Old Westbury.
Diversification Opportunities for Prudential Financial and Old Westbury
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prudential and Old is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial Services and Old Westbury Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Municipal 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 Services are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Municipal has no effect on the direction of Prudential Financial i.e., Prudential Financial and Old Westbury go up and down completely randomly.
Pair Corralation between Prudential Financial and Old Westbury
Assuming the 90 days horizon Prudential Financial Services is expected to under-perform the Old Westbury. In addition to that, Prudential Financial is 8.99 times more volatile than Old Westbury Municipal. It trades about -0.36 of its total potential returns per unit of risk. Old Westbury Municipal is currently generating about -0.3 per unit of volatility. If you would invest 1,146 in Old Westbury Municipal on October 16, 2024 and sell it today you would lose (11.00) from holding Old Westbury Municipal or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Prudential Financial Services vs. Old Westbury Municipal
Performance |
| Timeline |
| Prudential Financial |
| Old Westbury Municipal |
Prudential Financial and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and Old Westbury
The main advantage of trading using opposite Prudential Financial and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Prudential Financial vs. Ab Small Cap | Prudential Financial vs. Cardinal Small Cap | Prudential Financial vs. Needham Small Cap | Prudential Financial vs. Ab Small Cap |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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