Correlation Between Worthington Steel and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Worthington Steel 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 Worthington Steel and Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worthington Steel and Prudential Financial 4125, you can compare the effects of market volatilities on Worthington Steel 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 Worthington Steel with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worthington Steel and Prudential Financial.
Diversification Opportunities for Worthington Steel and Prudential Financial
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Worthington and Prudential is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Steel and Prudential Financial 4125 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 4125 and Worthington Steel 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 Worthington Steel 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 4125 has no effect on the direction of Worthington Steel i.e., Worthington Steel and Prudential Financial go up and down completely randomly.
Pair Corralation between Worthington Steel and Prudential Financial
Allowing for the 90-day total investment horizon Worthington Steel is expected to generate 3.82 times more return on investment than Prudential Financial. However, Worthington Steel is 3.82 times more volatile than Prudential Financial 4125. It trades about 0.28 of its potential returns per unit of risk. Prudential Financial 4125 is currently generating about -0.2 per unit of risk. If you would invest 3,201 in Worthington Steel on August 27, 2024 and sell it today you would earn a total of 1,302 from holding Worthington Steel or generate 40.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worthington Steel vs. Prudential Financial 4125
Performance |
| Timeline |
| Worthington Steel |
| Prudential Financial 4125 |
Worthington Steel and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worthington Steel and Prudential Financial
The main advantage of trading using opposite Worthington Steel and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worthington Steel 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.| Worthington Steel vs. US Global Investors | Worthington Steel vs. Neogen | Worthington Steel vs. Alvarium Tiedemann Holdings | Worthington Steel vs. Freedom Holding Corp |
| Prudential Financial vs. Southern Company Series | Prudential Financial vs. Credit Enhanced Corts | Prudential Financial vs. Structured Products Corp | Prudential Financial vs. Affiliated Managers 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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