Correlation Between Prudential Financial and MAHLE Metal
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and MAHLE Metal 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 MAHLE Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and MAHLE Metal Leve, you can compare the effects of market volatilities on Prudential Financial and MAHLE Metal 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 MAHLE Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and MAHLE Metal.
Diversification Opportunities for Prudential Financial and MAHLE Metal
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Prudential and MAHLE is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and MAHLE Metal Leve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAHLE Metal Leve 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 MAHLE Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAHLE Metal Leve has no effect on the direction of Prudential Financial i.e., Prudential Financial and MAHLE Metal go up and down completely randomly.
Pair Corralation between Prudential Financial and MAHLE Metal
Assuming the 90 days trading horizon Prudential Financial is expected to generate 1.16 times more return on investment than MAHLE Metal. However, Prudential Financial is 1.16 times more volatile than MAHLE Metal Leve. It trades about 0.18 of its potential returns per unit of risk. MAHLE Metal Leve is currently generating about -0.09 per unit of risk. If you would invest 32,340 in Prudential Financial on September 12, 2024 and sell it today you would earn a total of 6,150 from holding Prudential Financial or generate 19.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Prudential Financial vs. MAHLE Metal Leve
Performance |
Timeline |
Prudential Financial |
MAHLE Metal Leve |
Prudential Financial and MAHLE Metal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Prudential Financial and MAHLE Metal
The main advantage of trading using opposite Prudential Financial and MAHLE Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, MAHLE Metal 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 MAHLE Metal will offset losses from the drop in MAHLE Metal's long position.Prudential Financial vs. Fundo Investimento Imobiliario | Prudential Financial vs. LESTE FDO INV | Prudential Financial vs. Fras le SA | Prudential Financial vs. Western Digital |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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