Correlation Between Rational Dividend and Prudential

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

By analyzing existing cross correlation between Rational Dividend Capture and Prudential Real Estate, you can compare the effects of market volatilities on Rational Dividend and Prudential 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 Rational Dividend with a short position of Prudential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Dividend and Prudential.

Diversification Opportunities for Rational Dividend and Prudential

0.75

Correlation Coefficient

Rational Dividend  Prudential

Poor diversification

The 3 months correlation between Rational and Prudential is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Rational Dividend Capture and Prudential Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Real Estate and Rational Dividend 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 Rational Dividend Capture are associated (or correlated) with Prudential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Real Estate has no effect on the direction of Rational Dividend i.e., Rational Dividend and Prudential go up and down completely randomly.

Pair Corralation between Rational Dividend and Prudential

Assuming the 90 days horizon Rational Dividend Capture is expected to generate 0.68 times more return on investment than Prudential. However, Rational Dividend Capture is 1.47 times less risky than Prudential. It trades about 0.27 of its potential returns per unit of risk. Prudential Real Estate is currently generating about 0.07 per unit of risk. If you would invest  1,020  in Rational Dividend Capture on August 3, 2025 and sell it today you would earn a total of  104.00  from holding Rational Dividend Capture or generate 10.2% return on investment over 90 days.

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

Rational Dividend Capture  vs.  Prudential Real Estate

Rational Dividend Capture

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rational Dividend Capture are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rational Dividend may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Prudential Real Estate

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Real Estate are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rational Dividend and Prudential

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

The idea behind Rational Dividend Capture and Prudential Real Estate 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.