Correlation Between Center Coast and Prudential Absolute

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

By analyzing existing cross correlation between Center St Brookfield and Prudential Absolute Return, you can compare the effects of market volatilities on Center Coast and Prudential Absolute 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 Center Coast with a short position of Prudential Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Center Coast and Prudential Absolute.

Diversification Opportunities for Center Coast and Prudential Absolute

0.92

Correlation Coefficient

Center Coast  Prudential Absolute

Almost no diversification

The 3 months correlation between Center and Prudential is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Center St Brookfield and Prudential Absolute Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Absolute and Center Coast 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 Center St Brookfield are associated (or correlated) with Prudential Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Absolute has no effect on the direction of Center Coast i.e., Center Coast and Prudential Absolute go up and down completely randomly.

Pair Corralation between Center Coast and Prudential Absolute

Assuming the 90 days horizon Center St Brookfield is expected to generate 1.95 times more return on investment than Prudential Absolute. However, Center Coast is 1.95 times more volatile than Prudential Absolute Return. It trades about 0.2 of its potential returns per unit of risk. Prudential Absolute Return is currently generating about 0.21 per unit of risk. If you would invest  1,989  in Center St Brookfield on May 1, 2025 and sell it today you would earn a total of  48.00  from holding Center St Brookfield or generate 2.41% return on investment over 90 days.

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

Center St Brookfield  vs.  Prudential Absolute Return

Center St Brookfield

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Center St Brookfield are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Center Coast is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prudential Absolute

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Absolute Return are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential Absolute is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Center Coast and Prudential Absolute

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

The idea behind Center St Brookfield and Prudential Absolute Return 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..