Correlation Between Prudential Public and Lincoln National
Can any of the company-specific risk be diversified away by investing in both Prudential Public and Lincoln National 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 Lincoln National 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 Lincoln National, you can compare the effects of market volatilities on Prudential Public and Lincoln National 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 Lincoln National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Public and Lincoln National.
Diversification Opportunities for Prudential Public and Lincoln National
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and Lincoln is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Public Limited and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National 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 Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of Prudential Public i.e., Prudential Public and Lincoln National go up and down completely randomly.
Pair Corralation between Prudential Public and Lincoln National
Considering the 90-day investment horizon Prudential Public Limited is expected to under-perform the Lincoln National. But the stock apears to be less risky and, when comparing its historical volatility, Prudential Public Limited is 1.7 times less risky than Lincoln National. The stock trades about -0.13 of its potential returns per unit of risk. The Lincoln National is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,259 in Lincoln National on August 24, 2024 and sell it today you would earn a total of 290.00 from holding Lincoln National or generate 8.9% 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. Lincoln National
Performance |
| Timeline |
| Prudential Public |
| Lincoln National |
Prudential Public and Lincoln National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Public and Lincoln National
The main advantage of trading using opposite Prudential Public and Lincoln National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Public position performs unexpectedly, Lincoln National 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 Lincoln National will offset losses from the drop in Lincoln National's long position.| Prudential Public vs. Unum Group | Prudential Public vs. Manulife Financial Corp | Prudential Public vs. Brighthouse Financial | Prudential Public vs. FG Annuities Life |
| Lincoln National vs. Unum Group | Lincoln National vs. Manulife Financial Corp | Lincoln National vs. Brighthouse Financial | Lincoln National vs. FG Annuities Life |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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