Correlation Between Prudential Public and Genworth Financial
Can any of the company-specific risk be diversified away by investing in both Prudential Public and Genworth 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 Public and Genworth Financial 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 Genworth Financial, you can compare the effects of market volatilities on Prudential Public and Genworth 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 Public with a short position of Genworth Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Public and Genworth Financial.
Diversification Opportunities for Prudential Public and Genworth Financial
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and Genworth is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Public Limited and Genworth Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genworth Financial 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 Genworth Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genworth Financial has no effect on the direction of Prudential Public i.e., Prudential Public and Genworth Financial go up and down completely randomly.
Pair Corralation between Prudential Public and Genworth Financial
Considering the 90-day investment horizon Prudential Public Limited is expected to under-perform the Genworth Financial. But the stock apears to be less risky and, when comparing its historical volatility, Prudential Public Limited is 1.06 times less risky than Genworth Financial. The stock trades about -0.05 of its potential returns per unit of risk. The Genworth Financial is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 682.00 in Genworth Financial on August 30, 2024 and sell it today you would earn a total of 97.00 from holding Genworth Financial or generate 14.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Public Limited vs. Genworth Financial
Performance |
| Timeline |
| Prudential Public |
| Genworth Financial |
Prudential Public and Genworth Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Public and Genworth Financial
The main advantage of trading using opposite Prudential Public and Genworth Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Public position performs unexpectedly, Genworth 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 Genworth Financial will offset losses from the drop in Genworth Financial's long position.| Prudential Public vs. CNO Financial Group | Prudential Public vs. Jackson Financial | Prudential Public vs. MetLife Preferred Stock | Prudential Public vs. Jackson Financial |
| Genworth Financial vs. MetLife Preferred Stock | Genworth Financial vs. Prudential Public Limited | Genworth Financial vs. Primerica | Genworth Financial vs. CNO Financial Group |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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