Correlation Between Prudential Financial and Bolsa Mexicana

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

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

Diversification Opportunities for Prudential Financial and Bolsa Mexicana

0.37

Correlation Coefficient

Prudential Financial  Bolsa Mexicana

Weak diversification

The 3 months correlation between Prudential and Bolsa is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and Bolsa Mexicana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolsa Mexicana de 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 Bolsa Mexicana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolsa Mexicana de has no effect on the direction of Prudential Financial i.e., Prudential Financial and Bolsa Mexicana go up and down completely randomly.

Pair Corralation between Prudential Financial and Bolsa Mexicana

Assuming the 90 days trading horizon Prudential Financial is expected to generate 4.59 times less return on investment than Bolsa Mexicana. But when comparing it to its historical volatility, Prudential Financial is 11.76 times less risky than Bolsa Mexicana. It trades about 0.13 of its potential returns per unit of risk. Bolsa Mexicana de is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,209  in Bolsa Mexicana de on September 27, 2024 and sell it today you would earn a total of  161.00  from holding Bolsa Mexicana de or generate 5.02% return on investment over 90 days.

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

Prudential Financial  vs.  Bolsa Mexicana de

Prudential Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Prudential Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bolsa Mexicana de

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bolsa Mexicana de are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Bolsa Mexicana is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prudential Financial and Bolsa Mexicana

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

The idea behind Prudential Financial and Bolsa Mexicana de 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.