Correlation Between Affiliated Managers and Prudential Financial

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

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

Diversification Opportunities for Affiliated Managers and Prudential Financial

0.92

Correlation Coefficient

Affiliated Managers  Prudential Financial

Almost no diversification

The 3 months correlation between Affiliated and Prudential is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group, 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 Affiliated Managers 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 Affiliated Managers 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 4125 has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and Prudential Financial go up and down completely randomly.

Pair Corralation between Affiliated Managers and Prudential Financial

Given the investment horizon of 90 days Affiliated Managers Group, is expected to generate 1.24 times more return on investment than Prudential Financial. However, Affiliated Managers is 1.24 times more volatile than Prudential Financial 4125. It trades about -0.18 of its potential returns per unit of risk. Prudential Financial 4125 is currently generating about -0.37 per unit of risk. If you would invest  1,949  in Affiliated Managers Group, on September 24, 2024 and sell it today you would lose (80.00) from holding Affiliated Managers Group, or give up 4.1% of portfolio value over 90 days.

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

Affiliated Managers Group,  vs.  Prudential Financial 4125

Affiliated Managers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Affiliated Managers Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Affiliated Managers and Prudential Financial

The main advantage of trading using opposite Affiliated Managers and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Managers 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 Affiliated Managers Group, 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.