Correlation Between Prudential Financial and Grupo Aeromxico

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

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

Diversification Opportunities for Prudential Financial and Grupo Aeromxico

0.0

Correlation Coefficient

Prudential Financial  Grupo Aeromxico

Pay attention - limited upside

The 3 months correlation between Prudential and Grupo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and Grupo Aeromxico SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeromxico SAB 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 Grupo Aeromxico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeromxico SAB has no effect on the direction of Prudential Financial i.e., Prudential Financial and Grupo Aeromxico go up and down completely randomly.

Pair Corralation between Prudential Financial and Grupo Aeromxico

If you would invest  201,500  in Prudential Financial on October 23, 2024 and sell it today you would earn a total of  28,500  from holding Prudential Financial or generate 14.14% return on investment over 90 days.

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

Prudential Financial  vs.  Grupo Aeromxico SAB

Prudential Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Prudential Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Grupo Aeromxico SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Aeromxico SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Grupo Aeromxico 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 Financial and Grupo Aeromxico

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

The idea behind Prudential Financial and Grupo Aeromxico SAB 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..