Correlation Between Emerald Banking and Prudential Qma

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

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

Diversification Opportunities for Emerald Banking and Prudential Qma

0.86

Correlation Coefficient

Emerald Banking  Prudential Qma

Very poor diversification

The 3 months correlation between Emerald and Prudential is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Banking And and Prudential Qma Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Qma Stock and Emerald Banking 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 Emerald Banking And are associated (or correlated) with Prudential Qma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Qma Stock has no effect on the direction of Emerald Banking i.e., Emerald Banking and Prudential Qma go up and down completely randomly.

Pair Corralation between Emerald Banking and Prudential Qma

Assuming the 90 days horizon Emerald Banking And is expected to generate 2.62 times more return on investment than Prudential Qma. However, Emerald Banking is 2.62 times more volatile than Prudential Qma Stock. It trades about 0.15 of its potential returns per unit of risk. Prudential Qma Stock is currently generating about 0.21 per unit of risk. If you would invest  2,753  in Emerald Banking And on September 4, 2024 and sell it today you would earn a total of  488.00  from holding Emerald Banking And or generate 17.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Emerald Banking And  vs.  Prudential Qma Stock

Emerald Banking And

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Banking And are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Emerald Banking showed solid returns over the last few months and may actually be approaching a breakup point.

Prudential Qma Stock

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Qma Stock are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Prudential Qma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Emerald Banking and Prudential Qma

The main advantage of trading using opposite Emerald Banking and Prudential Qma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerald Banking position performs unexpectedly, Prudential Qma 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 Qma will offset losses from the drop in Prudential Qma's long position.

The idea behind Emerald Banking And and Prudential Qma Stock 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.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.