Correlation Between Prudential Financial and Grupo KUO

Can any of the company-specific risk be diversified away by investing in both Prudential Financial and Grupo KUO 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 KUO 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 KUO SAB, you can compare the effects of market volatilities on Prudential Financial and Grupo KUO 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 KUO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and Grupo KUO.

Diversification Opportunities for Prudential Financial and Grupo KUO

0.31

Correlation Coefficient

Prudential Financial  Grupo KUO

Weak diversification

The 3 months correlation between Prudential and Grupo is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and Grupo KUO SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo KUO 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 KUO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo KUO SAB has no effect on the direction of Prudential Financial i.e., Prudential Financial and Grupo KUO go up and down completely randomly.

Pair Corralation between Prudential Financial and Grupo KUO

If you would invest  201,500  in Prudential Financial on October 24, 2024 and sell it today you would earn a total of  42,500  from holding Prudential Financial or generate 21.09% return on investment over 90 days.

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

Prudential Financial  vs.  Grupo KUO SAB

Prudential Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Financial are ranked lower than 14 (%) 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 KUO SAB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo KUO SAB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Grupo KUO showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prudential Financial and Grupo KUO

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

The idea behind Prudential Financial and Grupo KUO 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.