Correlation Between Prudential Financial and United States

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

By analyzing existing cross correlation between Prudential Financial 4125 and United States Cellular, you can compare the effects of market volatilities on Prudential Financial and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and United States.

Diversification Opportunities for Prudential Financial and United States

-0.72

Correlation Coefficient

Prudential Financial  United States

Pay attention - limited upside

The 3 months correlation between Prudential and United is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial 4125 and United States Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Cellular 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 4125 are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Cellular has no effect on the direction of Prudential Financial i.e., Prudential Financial and United States go up and down completely randomly.

Pair Corralation between Prudential Financial and United States

Considering the 90-day investment horizon Prudential Financial 4125 is expected to under-perform the United States. In addition to that, Prudential Financial is 1.52 times more volatile than United States Cellular. It trades about -0.27 of its total potential returns per unit of risk. United States Cellular is currently generating about 0.1 per unit of volatility. If you would invest  2,154  in United States Cellular on September 21, 2024 and sell it today you would earn a total of  75.00  from holding United States Cellular or generate 3.48% return on investment over 90 days.

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

Prudential Financial 4125  vs.  United States Cellular

Prudential Financial 4125

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Financial 4125 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

United States Cellular

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United States Cellular are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, United States is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Prudential Financial and United States

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

The idea behind Prudential Financial 4125 and United States Cellular 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.