Correlation Between Prudential Financial and FG Annuities

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

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

Diversification Opportunities for Prudential Financial and FG Annuities

0.63

Correlation Coefficient

Prudential Financial  FG Annuities

Poor diversification

The 3 months correlation between Prudential and FG Annuities is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and FG Annuities Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Annuities Life 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 FG Annuities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Annuities Life has no effect on the direction of Prudential Financial i.e., Prudential Financial and FG Annuities go up and down completely randomly.

Pair Corralation between Prudential Financial and FG Annuities

Considering the 90-day investment horizon Prudential Financial is expected to generate 0.54 times more return on investment than FG Annuities. However, Prudential Financial is 1.85 times less risky than FG Annuities. It trades about 0.06 of its potential returns per unit of risk. FG Annuities Life is currently generating about 0.0 per unit of risk. If you would invest  10,005  in Prudential Financial on September 25, 2024 and sell it today you would earn a total of  1,923  from holding Prudential Financial or generate 19.22% return on investment over 90 days.

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

Prudential Financial  vs.  FG Annuities Life

Prudential Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Prudential Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

FG Annuities Life

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FG Annuities Life are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, FG Annuities is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Prudential Financial and FG Annuities

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

The idea behind Prudential Financial and FG Annuities Life 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.