Correlation Between Jalles Machado and Prudential Financial

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

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

Diversification Opportunities for Jalles Machado and Prudential Financial

-0.91

Correlation Coefficient

Jalles Machado  Prudential Financial

Pay attention - limited upside

The 3 months correlation between Jalles and Prudential is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Jalles Machado SA and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Jalles Machado 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 Jalles Machado SA 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 Jalles Machado i.e., Jalles Machado and Prudential Financial go up and down completely randomly.

Pair Corralation between Jalles Machado and Prudential Financial

Assuming the 90 days trading horizon Jalles Machado SA is expected to under-perform the Prudential Financial. In addition to that, Jalles Machado is 1.19 times more volatile than Prudential Financial. It trades about -0.25 of its total potential returns per unit of risk. Prudential Financial is currently generating about 0.14 per unit of volatility. If you would invest  32,340  in Prudential Financial on October 4, 2024 and sell it today you would earn a total of  4,697  from holding Prudential Financial or generate 14.52% return on investment over 90 days.

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

Jalles Machado SA  vs.  Prudential Financial

Jalles Machado SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jalles Machado SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Prudential Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Prudential Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jalles Machado and Prudential Financial

The main advantage of trading using opposite Jalles Machado and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jalles Machado 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 Jalles Machado SA 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.