Correlation Between CNO Financial and Prudential Financial

Can any of the company-specific risk be diversified away by investing in both CNO Financial 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 CNO Financial and Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CNO Financial Group and Prudential Financial, you can compare the effects of market volatilities on CNO Financial 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 CNO Financial with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNO Financial and Prudential Financial.

Diversification Opportunities for CNO Financial and Prudential Financial

-0.45

Correlation Coefficient

CNO Financial  Prudential Financial

Very good diversification

The 3 months correlation between CNO and Prudential is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CNO Financial Group and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and CNO Financial 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 CNO Financial Group 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 CNO Financial i.e., CNO Financial and Prudential Financial go up and down completely randomly.

Pair Corralation between CNO Financial and Prudential Financial

Considering the 90-day investment horizon CNO Financial Group is expected to generate 0.93 times more return on investment than Prudential Financial. However, CNO Financial Group is 1.08 times less risky than Prudential Financial. It trades about 0.13 of its potential returns per unit of risk. Prudential Financial is currently generating about -0.05 per unit of risk. If you would invest  3,702  in CNO Financial Group on December 28, 2024 and sell it today you would earn a total of  446.00  from holding CNO Financial Group or generate 12.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CNO Financial Group  vs.  Prudential Financial

CNO Financial Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CNO Financial Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, CNO Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Prudential Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Prudential Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CNO Financial and Prudential Financial

The main advantage of trading using opposite CNO Financial and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNO Financial 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.

The idea behind CNO Financial Group and Prudential Financial 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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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.