Correlation Between Prudential Global and Columbia Real

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

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

Diversification Opportunities for Prudential Global and Columbia Real

0.46

Correlation Coefficient

Prudential Global  Columbia Real

Very weak diversification

The 3 months correlation between Prudential and Columbia is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Global Total and Columbia Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Real Estate and Prudential Global 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 Global Total are associated (or correlated) with Columbia Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Real Estate has no effect on the direction of Prudential Global i.e., Prudential Global and Columbia Real go up and down completely randomly.

Pair Corralation between Prudential Global and Columbia Real

Assuming the 90 days horizon Prudential Global Total is expected to generate 0.3 times more return on investment than Columbia Real. However, Prudential Global Total is 3.29 times less risky than Columbia Real. It trades about 0.18 of its potential returns per unit of risk. Columbia Real Estate is currently generating about -0.01 per unit of risk. If you would invest  502.00  in Prudential Global Total on December 22, 2024 and sell it today you would earn a total of  18.00  from holding Prudential Global Total or generate 3.59% return on investment over 90 days.

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

Prudential Global Total  vs.  Columbia Real Estate

Prudential Global Total

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Global Total are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Columbia Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prudential Global and Columbia Real

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

The idea behind Prudential Global Total and Columbia Real Estate 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.