Correlation Between Swan Defined and Prudential Financial

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

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

Diversification Opportunities for Swan Defined and Prudential Financial

0.66

Correlation Coefficient

Swan Defined  Prudential Financial

Poor diversification

The 3 months correlation between Swan and Prudential is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Swan Defined Risk and Prudential Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Swan Defined 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 Swan Defined Risk are associated (or correlated) with Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Swan Defined i.e., Swan Defined and Prudential Financial go up and down completely randomly.

Pair Corralation between Swan Defined and Prudential Financial

Assuming the 90 days horizon Swan Defined Risk is expected to generate 0.59 times more return on investment than Prudential Financial. However, Swan Defined Risk is 1.71 times less risky than Prudential Financial. It trades about 0.23 of its potential returns per unit of risk. Prudential Financial Services is currently generating about 0.02 per unit of risk. If you would invest  1,356  in Swan Defined Risk on July 8, 2025 and sell it today you would earn a total of  97.00  from holding Swan Defined Risk or generate 7.15% return on investment over 90 days.

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

Swan Defined Risk  vs.  Prudential Financial Services

Swan Defined Risk

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Swan Defined Risk are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Swan Defined may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Prudential Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Financial Services are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Swan Defined and Prudential Financial

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

The idea behind Swan Defined Risk and Prudential Financial Services 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.