Correlation Between Prudential and Firsthand Alternative
Can any of the company-specific risk be diversified away by investing in both Prudential and Firsthand Alternative 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 and Firsthand Alternative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential E Bond and Firsthand Alternative Energy, you can compare the effects of market volatilities on Prudential and Firsthand Alternative 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 with a short position of Firsthand Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential and Firsthand Alternative.
Diversification Opportunities for Prudential and Firsthand Alternative
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and Firsthand is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Prudential E Bond and Firsthand Alternative Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firsthand Alternative and Prudential 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 E Bond are associated (or correlated) with Firsthand Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firsthand Alternative has no effect on the direction of Prudential i.e., Prudential and Firsthand Alternative go up and down completely randomly.
Pair Corralation between Prudential and Firsthand Alternative
Assuming the 90 days horizon Prudential E Bond is expected to generate 0.17 times more return on investment than Firsthand Alternative. However, Prudential E Bond is 5.85 times less risky than Firsthand Alternative. It trades about 0.08 of its potential returns per unit of risk. Firsthand Alternative Energy is currently generating about -0.01 per unit of risk. If you would invest 848.00 in Prudential E Bond on September 13, 2024 and sell it today you would earn a total of 26.00 from holding Prudential E Bond or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential E Bond vs. Firsthand Alternative Energy
Performance |
| Timeline |
| Prudential E Bond |
| Firsthand Alternative |
Prudential and Firsthand Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential and Firsthand Alternative
The main advantage of trading using opposite Prudential and Firsthand Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential position performs unexpectedly, Firsthand Alternative 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 Firsthand Alternative will offset losses from the drop in Firsthand Alternative's long position.| Prudential vs. Simt Multi Asset Inflation | Prudential vs. Blackrock Inflation Protected | Prudential vs. Western Asset Inflation | Prudential vs. American Funds Inflation |
| Firsthand Alternative vs. Guinness Atkinson Alternative | Firsthand Alternative vs. Calvert Global Energy | Firsthand Alternative vs. New Alternatives Fund | Firsthand Alternative vs. Shelton Green Alpha |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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