Correlation Between Prudential Financial and Globe Life

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

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

Diversification Opportunities for Prudential Financial and Globe Life

-0.58

Correlation Coefficient

Prudential Financial  Globe Life

Excellent diversification

The 3 months correlation between Prudential and Globe is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and Globe Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe 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 Globe Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Life has no effect on the direction of Prudential Financial i.e., Prudential Financial and Globe Life go up and down completely randomly.

Pair Corralation between Prudential Financial and Globe Life

Considering the 90-day investment horizon Prudential Financial is expected to under-perform the Globe Life. In addition to that, Prudential Financial is 1.05 times more volatile than Globe Life. It trades about -0.17 of its total potential returns per unit of risk. Globe Life is currently generating about 0.13 per unit of volatility. If you would invest  11,100  in Globe Life on November 29, 2024 and sell it today you would earn a total of  1,093  from holding Globe Life or generate 9.85% return on investment over 90 days.

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

Prudential Financial  vs.  Globe Life

Prudential Financial

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Globe Life

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Life are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Globe Life may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Prudential Financial and Globe Life

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

The idea behind Prudential Financial and Globe 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.