Correlation Between Alleghany and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Alleghany 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 Alleghany and Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alleghany and Prudential Financial, you can compare the effects of market volatilities on Alleghany 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 Alleghany with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alleghany and Prudential Financial.
Diversification Opportunities for Alleghany and Prudential Financial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alleghany and Prudential is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Alleghany and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Alleghany 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 Alleghany 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 Alleghany i.e., Alleghany and Prudential Financial go up and down completely randomly.
Pair Corralation between Alleghany and Prudential Financial
If you would invest 84,779 in Alleghany on January 26, 2024 and sell it today you would earn a total of 0.00 from holding Alleghany or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Alleghany vs. Prudential Financial
Performance |
| Timeline |
| Alleghany |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Prudential Financial |
Alleghany and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alleghany and Prudential Financial
The main advantage of trading using opposite Alleghany and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alleghany 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.| Alleghany vs. Jeld Wen Holding | Alleghany vs. ChampionX | Alleghany vs. Tyson Foods | Alleghany vs. Wicket Gaming AB |
| Prudential Financial vs. Lincoln National | Prudential Financial vs. Aflac Incorporated | Prudential Financial vs. Brighthouse Financial | Prudential Financial vs. Unum Group |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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