Correlation Between Prudential Intl and The Hartford
Can any of the company-specific risk be diversified away by investing in both Prudential Intl and The Hartford 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 Intl and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Intl Bond and The Hartford Small, you can compare the effects of market volatilities on Prudential Intl and The Hartford 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 Intl with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Intl and The Hartford.
Diversification Opportunities for Prudential Intl and The Hartford
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and The is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Intl Bond and The Hartford Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small and Prudential Intl 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 Intl Bond are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small has no effect on the direction of Prudential Intl i.e., Prudential Intl and The Hartford go up and down completely randomly.
Pair Corralation between Prudential Intl and The Hartford
If you would invest 2,677 in The Hartford Small on September 3, 2024 and sell it today you would earn a total of 476.00 from holding The Hartford Small or generate 17.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.68% |
| Values | Daily Returns |
Prudential Intl Bond vs. The Hartford Small
Performance |
| Timeline |
| Prudential Intl Bond |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hartford Small |
Prudential Intl and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Intl and The Hartford
The main advantage of trading using opposite Prudential Intl and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Intl position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.The idea behind Prudential Intl Bond and The Hartford Small pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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