Correlation Between Sixt SE and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Sixt SE and Prudential 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 Sixt SE and Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sixt SE and Prudential Financial, you can compare the effects of market volatilities on Sixt SE and Prudential 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 Sixt SE with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sixt SE and Prudential Financial.
Diversification Opportunities for Sixt SE and Prudential Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sixt and Prudential is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sixt SE and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Sixt SE 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 Sixt SE are associated (or correlated) with Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Sixt SE i.e., Sixt SE and Prudential Financial go up and down completely randomly.
Pair Corralation between Sixt SE and Prudential Financial
Assuming the 90 days trading horizon Sixt SE is expected to under-perform the Prudential Financial. In addition to that, Sixt SE is 2.07 times more volatile than Prudential Financial. It trades about -0.08 of its total potential returns per unit of risk. Prudential Financial is currently generating about 0.38 per unit of volatility. If you would invest 11,020 in Prudential Financial on September 2, 2024 and sell it today you would earn a total of 1,195 from holding Prudential Financial or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sixt SE vs. Prudential Financial
Performance |
| Timeline |
| Sixt SE |
| Prudential Financial |
Sixt SE and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sixt SE and Prudential Financial
The main advantage of trading using opposite Sixt SE and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sixt SE position performs unexpectedly, Prudential 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| Sixt SE vs. United Rentals | Sixt SE vs. Superior Plus Corp | Sixt SE vs. NMI Holdings | Sixt SE vs. Origin Agritech |
| Prudential Financial vs. United Insurance Holdings | Prudential Financial vs. Singapore Reinsurance | Prudential Financial vs. Zurich Insurance Group | Prudential Financial vs. Carsales |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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