Correlation Between Prudential Public and Globe Life

Can any of the company-specific risk be diversified away by investing in both Prudential Public 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 Public 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 Public Limited and Globe Life, you can compare the effects of market volatilities on Prudential Public 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 Public with a short position of Globe Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Public and Globe Life.

Diversification Opportunities for Prudential Public and Globe Life

-0.23

Correlation Coefficient

Prudential Public  Globe Life

Very good diversification

The 3 months correlation between Prudential and Globe is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Public Limited and Globe Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Life and Prudential Public 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 Public Limited 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 Public i.e., Prudential Public and Globe Life go up and down completely randomly.

Pair Corralation between Prudential Public and Globe Life

Considering the 90-day investment horizon Prudential Public Limited is expected to under-perform the Globe Life. In addition to that, Prudential Public is 1.41 times more volatile than Globe Life. It trades about 0.0 of its total potential returns per unit of risk. Globe Life is currently generating about 0.07 per unit of volatility. If you would invest  10,494  in Globe Life on September 2, 2024 and sell it today you would earn a total of  630.00  from holding Globe Life or generate 6.0% return on investment over 90 days.

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

Prudential Public Limited  vs.  Globe Life

Prudential Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Public Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Prudential Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Globe Life

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Life are ranked lower than 5 (%) 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 January 2025.

Pair Trading with Prudential Public and Globe Life

The main advantage of trading using opposite Prudential Public and Globe Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Public 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 Public Limited 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.