Correlation Between Prudential Health and Deutsche Small

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

By analyzing existing cross correlation between Prudential Health Sciences and Deutsche Small Cap, you can compare the effects of market volatilities on Prudential Health and Deutsche Small 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 Health with a short position of Deutsche Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Health and Deutsche Small.

Diversification Opportunities for Prudential Health and Deutsche Small

0.74

Correlation Coefficient

Prudential Health  Deutsche Small

Poor diversification

The 3 months correlation between Prudential and Deutsche is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Health Sciences and Deutsche Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Small Cap and Prudential Health 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 Health Sciences are associated (or correlated) with Deutsche Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Small Cap has no effect on the direction of Prudential Health i.e., Prudential Health and Deutsche Small go up and down completely randomly.

Pair Corralation between Prudential Health and Deutsche Small

Assuming the 90 days horizon Prudential Health Sciences is expected to generate 0.85 times more return on investment than Deutsche Small. However, Prudential Health Sciences is 1.18 times less risky than Deutsche Small. It trades about 0.27 of its potential returns per unit of risk. Deutsche Small Cap is currently generating about 0.08 per unit of risk. If you would invest  2,949  in Prudential Health Sciences on August 5, 2025 and sell it today you would earn a total of  545.00  from holding Prudential Health Sciences or generate 18.48% return on investment over 90 days.

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

Prudential Health Sciences  vs.  Deutsche Small Cap

Prudential Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Health Sciences are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Prudential Health showed solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Small Cap

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Small Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Deutsche Small 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 Health and Deutsche Small

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

The idea behind Prudential Health Sciences and Deutsche Small Cap 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..