Correlation Between Prudential Financial and Growth Fund

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

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

Diversification Opportunities for Prudential Financial and Growth Fund

0.89

Correlation Coefficient

Prudential Financial  Growth Fund

Very poor diversification

The 3 months correlation between PRUDENTIAL and Growth is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial Services and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund 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 Services are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Prudential Financial i.e., Prudential Financial and Growth Fund go up and down completely randomly.

Pair Corralation between Prudential Financial and Growth Fund

Assuming the 90 days horizon Prudential Financial is expected to generate 1.07 times less return on investment than Growth Fund. In addition to that, Prudential Financial is 1.45 times more volatile than Growth Fund Of. It trades about 0.2 of its total potential returns per unit of risk. Growth Fund Of is currently generating about 0.32 per unit of volatility. If you would invest  6,191  in Growth Fund Of on September 6, 2024 and sell it today you would earn a total of  1,081  from holding Growth Fund Of or generate 17.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Prudential Financial Services  vs.  Growth Fund Of

Prudential Financial

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Financial Services are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Prudential Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Growth Fund

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Fund Of are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Growth Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prudential Financial and Growth Fund

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

The idea behind Prudential Financial Services and Growth Fund Of 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 Transaction History module to view history of all your transactions and understand their impact on performance.