Correlation Between Prudential Financial and Ascendis Pharma

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

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

Diversification Opportunities for Prudential Financial and Ascendis Pharma

0.51

Correlation Coefficient

Prudential Financial  Ascendis Pharma

Very weak diversification

The 3 months correlation between Prudential and Ascendis is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and Ascendis Pharma AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendis Pharma AS and Prudential Financial 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 Prudential Financial are associated (or correlated) with Ascendis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendis Pharma AS has no effect on the direction of Prudential Financial i.e., Prudential Financial and Ascendis Pharma go up and down completely randomly.

Pair Corralation between Prudential Financial and Ascendis Pharma

Assuming the 90 days trading horizon Prudential Financial is expected to under-perform the Ascendis Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Prudential Financial is 1.65 times less risky than Ascendis Pharma. The stock trades about -0.41 of its potential returns per unit of risk. The Ascendis Pharma AS is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  5,335  in Ascendis Pharma AS on October 12, 2024 and sell it today you would earn a total of  509.00  from holding Ascendis Pharma AS or generate 9.54% return on investment over 90 days.

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

Prudential Financial  vs.  Ascendis Pharma AS

Prudential Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Prudential Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ascendis Pharma AS

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Prudential Financial and Ascendis Pharma

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

The idea behind Prudential Financial and Ascendis Pharma AS 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.