Correlation Between Prudential Financial and Strats Trust

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

By analyzing existing cross correlation between Prudential Financial 4125 and Strats Trust Cellular, you can compare the effects of market volatilities on Prudential Financial and Strats Trust 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 Strats Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and Strats Trust.

Diversification Opportunities for Prudential Financial and Strats Trust

-0.03

Correlation Coefficient

Prudential Financial  Strats Trust

Good diversification

The 3 months correlation between Prudential and Strats is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial 4125 and Strats Trust Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strats Trust Cellular 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 4125 are associated (or correlated) with Strats Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strats Trust Cellular has no effect on the direction of Prudential Financial i.e., Prudential Financial and Strats Trust go up and down completely randomly.

Pair Corralation between Prudential Financial and Strats Trust

Considering the 90-day investment horizon Prudential Financial 4125 is expected to under-perform the Strats Trust. But the stock apears to be less risky and, when comparing its historical volatility, Prudential Financial 4125 is 1.95 times less risky than Strats Trust. The stock trades about -0.12 of its potential returns per unit of risk. The Strats Trust Cellular is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  953.00  in Strats Trust Cellular on October 7, 2024 and sell it today you would earn a total of  10.00  from holding Strats Trust Cellular or generate 1.05% return on investment over 90 days.

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

Prudential Financial 4125  vs.  Strats Trust Cellular

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 latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Strats Trust Cellular

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strats Trust Cellular are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking indicators, Strats Trust is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Prudential Financial and Strats Trust

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

The idea behind Prudential Financial 4125 and Strats Trust Cellular 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.