Correlation Between Prudential High and CONSOLIDATED

Can any of the company-specific risk be diversified away by investing in both Prudential High and CONSOLIDATED 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 CONSOLIDATED 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 CONSOLIDATED EDISON N, you can compare the effects of market volatilities on Prudential High and CONSOLIDATED 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 CONSOLIDATED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential High and CONSOLIDATED.

Diversification Opportunities for Prudential High and CONSOLIDATED

0.23

Correlation Coefficient

Prudential High  CONSOLIDATED

Modest diversification

The 3 months correlation between Prudential and CONSOLIDATED is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Prudential High Yield and CONSOLIDATED EDISON N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOLIDATED EDISON 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 CONSOLIDATED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOLIDATED EDISON has no effect on the direction of Prudential High i.e., Prudential High and CONSOLIDATED go up and down completely randomly.

Pair Corralation between Prudential High and CONSOLIDATED

Assuming the 90 days horizon Prudential High Yield is expected to generate 0.47 times more return on investment than CONSOLIDATED. However, Prudential High Yield is 2.13 times less risky than CONSOLIDATED. It trades about 0.16 of its potential returns per unit of risk. CONSOLIDATED EDISON N is currently generating about -0.09 per unit of risk. If you would invest  477.00  in Prudential High Yield on July 28, 2025 and sell it today you would earn a total of  10.00  from holding Prudential High Yield or generate 2.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	66.15%
Values	Daily Returns

Prudential High Yield  vs.  CONSOLIDATED EDISON N

Prudential High Yield

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential High Yield are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. 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.

CONSOLIDATED EDISON

Risk-Adjusted Performance

Weakest

Over the last 90 days CONSOLIDATED EDISON N has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONSOLIDATED 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 CONSOLIDATED

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

The idea behind Prudential High Yield and CONSOLIDATED EDISON N 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.