Correlation Between Prudential Public and American Equity
Can any of the company-specific risk be diversified away by investing in both Prudential Public and American Equity 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 Public and American Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Public Limited and American Equity Investment, you can compare the effects of market volatilities on Prudential Public and American Equity 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 Public with a short position of American Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Public and American Equity.
Diversification Opportunities for Prudential Public and American Equity
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and American is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Public Limited and American Equity Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Equity Inve and Prudential Public 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 Public Limited are associated (or correlated) with American Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Equity Inve has no effect on the direction of Prudential Public i.e., Prudential Public and American Equity go up and down completely randomly.
Pair Corralation between Prudential Public and American Equity
Considering the 90-day investment horizon Prudential Public Limited is expected to under-perform the American Equity. But the stock apears to be less risky and, when comparing its historical volatility, Prudential Public Limited is 1.31 times less risky than American Equity. The stock trades about -0.04 of its potential returns per unit of risk. The American Equity Investment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,029 in American Equity Investment on August 24, 2024 and sell it today you would earn a total of 1,346 from holding American Equity Investment or generate 33.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 32.06% |
| Values | Daily Returns |
Prudential Public Limited vs. American Equity Investment
Performance |
| Timeline |
| Prudential Public |
| American Equity Inve |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Prudential Public and American Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Public and American Equity
The main advantage of trading using opposite Prudential Public and American Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Public position performs unexpectedly, American Equity 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 American Equity will offset losses from the drop in American Equity's long position.| Prudential Public vs. Manulife Financial Corp | Prudential Public vs. Brighthouse Financial | Prudential Public vs. FG Annuities Life | Prudential Public vs. Jackson Financial |
| American Equity vs. MetLife Preferred Stock | American Equity vs. Prudential Public Limited | American Equity vs. MetLife Preferred Stock | American Equity vs. Jackson 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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