Correlation Between Prudential High and Access Flex

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

By analyzing existing cross correlation between Prudential High Yield and Access Flex High, you can compare the effects of market volatilities on Prudential High and Access Flex 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 High with a short position of Access Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential High and Access Flex.

Diversification Opportunities for Prudential High and Access Flex

0.92

Correlation Coefficient

Prudential High  Access Flex

Almost no diversification

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

Pair Corralation between Prudential High and Access Flex

Assuming the 90 days horizon Prudential High Yield is expected to generate 0.55 times more return on investment than Access Flex. However, Prudential High Yield is 1.81 times less risky than Access Flex. It trades about -0.09 of its potential returns per unit of risk. Access Flex High is currently generating about -0.08 per unit of risk. If you would invest  474.00  in Prudential High Yield on January 15, 2025 and sell it today you would lose (8.00) from holding Prudential High Yield or give up 1.69% of portfolio value over 90 days.

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

Prudential High Yield  vs.  Access Flex High

Prudential High Yield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential High Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Prudential High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Access Flex High

Risk-Adjusted Performance

Very Weak

Over the last 90 days Access Flex High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Access Flex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prudential High and Access Flex

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

The idea behind Prudential High Yield and Access Flex High 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.