Correlation Between Vamos Locao and Prudential Financial

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

By analyzing existing cross correlation between Vamos Locao de and Prudential Financial, you can compare the effects of market volatilities on Vamos Locao and Prudential Financial 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 Vamos Locao with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vamos Locao and Prudential Financial.

Diversification Opportunities for Vamos Locao and Prudential Financial

-0.3

Correlation Coefficient

Vamos Locao  Prudential Financial

Very good diversification

The 3 months correlation between Vamos and Prudential is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Vamos Locao de and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Vamos Locao 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 Vamos Locao de are associated (or correlated) with Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Vamos Locao i.e., Vamos Locao and Prudential Financial go up and down completely randomly.

Pair Corralation between Vamos Locao and Prudential Financial

Assuming the 90 days trading horizon Vamos Locao de is expected to under-perform the Prudential Financial. In addition to that, Vamos Locao is 1.26 times more volatile than Prudential Financial. It trades about -0.05 of its total potential returns per unit of risk. Prudential Financial is currently generating about 0.05 per unit of volatility. If you would invest  26,000  in Prudential Financial on October 23, 2024 and sell it today you would earn a total of  9,923  from holding Prudential Financial or generate 38.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.82%
Values	Daily Returns

Vamos Locao de  vs.  Prudential Financial

Vamos Locao de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vamos Locao de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Prudential Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Prudential Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vamos Locao and Prudential Financial

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

The idea behind Vamos Locao de and Prudential Financial 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.