Correlation Between Prudential Financial and F PD

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

By analyzing existing cross correlation between Prudential Financial 5950 and F PD, you can compare the effects of market volatilities on Prudential Financial and F PD 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 Financial with a short position of F PD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and F PD.

Diversification Opportunities for Prudential Financial and F PD

0.69

Correlation Coefficient

Prudential Financial  F PD

Poor diversification

The 3 months correlation between Prudential and F-PD is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial 5950 and F PD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F PD and Prudential Financial 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 Financial 5950 are associated (or correlated) with F PD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F PD has no effect on the direction of Prudential Financial i.e., Prudential Financial and F PD go up and down completely randomly.

Pair Corralation between Prudential Financial and F PD

Considering the 90-day investment horizon Prudential Financial 5950 is expected to generate 0.65 times more return on investment than F PD. However, Prudential Financial 5950 is 1.53 times less risky than F PD. It trades about 0.04 of its potential returns per unit of risk. F PD is currently generating about 0.01 per unit of risk. If you would invest  2,251  in Prudential Financial 5950 on February 14, 2025 and sell it today you would earn a total of  240.00  from holding Prudential Financial 5950 or generate 10.66% return on investment over 90 days.

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

Prudential Financial 5950  vs.  F PD

Prudential Financial 5950

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential Financial 5950 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Prudential Financial is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

F PD

Risk-Adjusted Performance

Very Weak

Over the last 90 days F PD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Preferred Stock's basic indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Prudential Financial and F PD

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

The idea behind Prudential Financial 5950 and F PD 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.