Correlation Between Enstar Group and Prudential Financial

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

By analyzing existing cross correlation between Enstar Group Ltd and Prudential Financial 5950, you can compare the effects of market volatilities on Enstar Group 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 Enstar Group with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enstar Group and Prudential Financial.

Diversification Opportunities for Enstar Group and Prudential Financial

-0.34

Correlation Coefficient

Enstar Group  Prudential Financial

Very good diversification

The 3 months correlation between Enstar and Prudential is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Enstar Group Ltd and Prudential Financial 5950 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 5950 and Enstar Group 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 Enstar Group Ltd 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 5950 has no effect on the direction of Enstar Group i.e., Enstar Group and Prudential Financial go up and down completely randomly.

Pair Corralation between Enstar Group and Prudential Financial

Assuming the 90 days horizon Enstar Group Ltd is expected to generate 2.16 times more return on investment than Prudential Financial. However, Enstar Group is 2.16 times more volatile than Prudential Financial 5950. It trades about 0.08 of its potential returns per unit of risk. Prudential Financial 5950 is currently generating about 0.03 per unit of risk. If you would invest  1,943  in Enstar Group Ltd on September 1, 2024 and sell it today you would earn a total of  113.00  from holding Enstar Group Ltd or generate 5.82% return on investment over 90 days.

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

Enstar Group Ltd  vs.  Prudential Financial 5950

Enstar Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enstar Group Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Enstar Group is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Prudential Financial 5950

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Financial 5950 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Prudential Financial is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Enstar Group and Prudential Financial

The main advantage of trading using opposite Enstar Group and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enstar Group 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 Enstar Group Ltd and Prudential Financial 5950 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.