Correlation Between Strats Trust and Prudential Financial

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

By analyzing existing cross correlation between Strats Trust Cellular and Prudential Financial 4125, you can compare the effects of market volatilities on Strats Trust 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 Strats Trust with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strats Trust and Prudential Financial.

Diversification Opportunities for Strats Trust and Prudential Financial

0.09

Correlation Coefficient

Strats Trust  Prudential Financial

Significant diversification

The 3 months correlation between Strats and Prudential is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Strats Trust Cellular 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 Strats Trust 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 Strats Trust Cellular 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 Strats Trust i.e., Strats Trust and Prudential Financial go up and down completely randomly.

Pair Corralation between Strats Trust and Prudential Financial

Considering the 90-day investment horizon Strats Trust Cellular is expected to generate 1.96 times more return on investment than Prudential Financial. However, Strats Trust is 1.96 times more volatile than Prudential Financial 4125. It trades about 0.01 of its potential returns per unit of risk. Prudential Financial 4125 is currently generating about -0.02 per unit of risk. If you would invest  929.00  in Strats Trust Cellular on October 22, 2024 and sell it today you would earn a total of  11.00  from holding Strats Trust Cellular or generate 1.18% return on investment over 90 days.

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

Strats Trust Cellular  vs.  Prudential Financial 4125

Strats Trust Cellular

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strats Trust Cellular has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking indicators, Strats Trust is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Prudential Financial 4125

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Financial 4125 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Strats Trust and Prudential Financial

The main advantage of trading using opposite Strats Trust and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strats Trust 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 Strats Trust Cellular and Prudential Financial 4125 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.