Correlation Between Prudential Financial and Jefferies Financial

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

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

Diversification Opportunities for Prudential Financial and Jefferies Financial

0.88

Correlation Coefficient

Prudential Financial  Jefferies Financial

Very poor diversification

The 3 months correlation between Prudential and Jefferies is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and Jefferies Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jefferies Financial 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 Jefferies Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jefferies Financial has no effect on the direction of Prudential Financial i.e., Prudential Financial and Jefferies Financial go up and down completely randomly.

Pair Corralation between Prudential Financial and Jefferies Financial

Assuming the 90 days trading horizon Prudential Financial is expected to generate 0.51 times more return on investment than Jefferies Financial. However, Prudential Financial is 1.95 times less risky than Jefferies Financial. It trades about -0.19 of its potential returns per unit of risk. Jefferies Financial Group is currently generating about -0.25 per unit of risk. If you would invest  37,037  in Prudential Financial on December 28, 2024 and sell it today you would lose (5,858) from holding Prudential Financial or give up 15.82% of portfolio value over 90 days.

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

Prudential Financial  vs.  Jefferies Financial Group

Prudential Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential Financial 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 fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Jefferies Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jefferies Financial Group 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 somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Prudential Financial and Jefferies Financial

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

The idea behind Prudential Financial and Jefferies Financial Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.