Correlation Between United States and Prudential Financial

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

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

Diversification Opportunities for United States and Prudential Financial

-0.66

Correlation Coefficient

United States  Prudential Financial

Excellent diversification

The 3 months correlation between United and Prudential is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding United States Cellular and Prudential Financial 4125 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 4125 and United States 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 United States Cellular 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 4125 has no effect on the direction of United States i.e., United States and Prudential Financial go up and down completely randomly.

Pair Corralation between United States and Prudential Financial

Considering the 90-day investment horizon United States Cellular is expected to generate 0.65 times more return on investment than Prudential Financial. However, United States Cellular is 1.55 times less risky than Prudential Financial. It trades about 0.08 of its potential returns per unit of risk. Prudential Financial 4125 is currently generating about -0.27 per unit of risk. If you would invest  2,171  in United States Cellular on September 25, 2024 and sell it today you would earn a total of  54.00  from holding United States Cellular or generate 2.49% return on investment over 90 days.

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

United States Cellular  vs.  Prudential Financial 4125

United States Cellular

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United States Cellular are ranked lower than 6 (%) 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.

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.

Pair Trading with United States and Prudential Financial

The main advantage of trading using opposite United States and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Cellular and Prudential Financial 4125 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.