Correlation Between DNB ASA and Prudential Plc

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Can any of the company-specific risk be diversified away by investing in both DNB ASA and Prudential Plc 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 DNB ASA and Prudential Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DNB ASA and Prudential Plc, you can compare the effects of market volatilities on DNB ASA and Prudential Plc 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 DNB ASA with a short position of Prudential Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of DNB ASA and Prudential Plc.

Diversification Opportunities for DNB ASA and Prudential Plc

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between DNB and Prudential is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DNB ASA and Prudential Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Plc and DNB ASA 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 DNB ASA are associated (or correlated) with Prudential Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Plc has no effect on the direction of DNB ASA i.e., DNB ASA and Prudential Plc go up and down completely randomly.

Pair Corralation between DNB ASA and Prudential Plc

If you would invest (100.00) in DNB ASA on December 29, 2023 and sell it today you would earn a total of  100.00  from holding DNB ASA or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

DNB ASA  vs.  Prudential Plc

 Performance 
       Timeline  
DNB ASA 

Risk-Adjusted Performance

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Over the last 90 days DNB ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, DNB ASA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
Prudential Plc 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days Prudential Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

DNB ASA and Prudential Plc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DNB ASA and Prudential Plc

The main advantage of trading using opposite DNB ASA and Prudential Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DNB ASA position performs unexpectedly, Prudential Plc 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 Plc will offset losses from the drop in Prudential Plc's long position.
The idea behind DNB ASA and Prudential Plc 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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