Correlation Between Young Cos and Prudential Plc
Can any of the company-specific risk be diversified away by investing in both Young Cos and Prudential Plc 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 Young Cos and Prudential Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Young Cos Brewery and Prudential plc, you can compare the effects of market volatilities on Young Cos and Prudential Plc 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 Young Cos with a short position of Prudential Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Cos and Prudential Plc.
Diversification Opportunities for Young Cos and Prudential Plc
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Young and Prudential is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Young Cos Brewery and Prudential plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential plc and Young Cos 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 Young Cos Brewery are associated (or correlated) with Prudential Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential plc has no effect on the direction of Young Cos i.e., Young Cos and Prudential Plc go up and down completely randomly.
Pair Corralation between Young Cos and Prudential Plc
Assuming the 90 days trading horizon Young Cos Brewery is expected to generate 0.49 times more return on investment than Prudential Plc. However, Young Cos Brewery is 2.04 times less risky than Prudential Plc. It trades about 0.21 of its potential returns per unit of risk. Prudential plc is currently generating about -0.01 per unit of risk. If you would invest 61,669 in Young Cos Brewery on September 5, 2024 and sell it today you would earn a total of 3,131 from holding Young Cos Brewery or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Young Cos Brewery vs. Prudential plc
Performance |
| Timeline |
| Young Cos Brewery |
| Prudential plc |
Young Cos and Prudential Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Young Cos and Prudential Plc
The main advantage of trading using opposite Young Cos and Prudential Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Young Cos position performs unexpectedly, Prudential Plc 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 Plc will offset losses from the drop in Prudential Plc's long position.| Young Cos vs. Samsung Electronics Co | Young Cos vs. Samsung Electronics Co | Young Cos vs. Hyundai Motor | Young Cos vs. Toyota Motor Corp |
| Prudential Plc vs. Molson Coors Beverage | Prudential Plc vs. Eastinco Mining Exploration | Prudential Plc vs. iShares Physical Silver | Prudential Plc vs. Young Cos Brewery |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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