Correlation Between Federated Max-cap and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Federated Max-cap 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 Federated Max-cap and Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Max Cap Index and Prudential Financial Services, you can compare the effects of market volatilities on Federated Max-cap 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 Federated Max-cap with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Max-cap and Prudential Financial.
Diversification Opportunities for Federated Max-cap and Prudential Financial
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Prudential is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Federated Max Cap Index and Prudential Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Federated Max-cap 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 Federated Max Cap Index 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 Federated Max-cap i.e., Federated Max-cap and Prudential Financial go up and down completely randomly.
Pair Corralation between Federated Max-cap and Prudential Financial
Assuming the 90 days horizon Federated Max Cap Index is expected to generate 0.67 times more return on investment than Prudential Financial. However, Federated Max Cap Index is 1.49 times less risky than Prudential Financial. It trades about 0.21 of its potential returns per unit of risk. Prudential Financial Services is currently generating about 0.09 per unit of risk. If you would invest 771.00 in Federated Max Cap Index on June 12, 2025 and sell it today you would earn a total of 63.00 from holding Federated Max Cap Index or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Max Cap Index vs. Prudential Financial Services
Performance |
| Timeline |
| Federated Max Cap |
| Prudential Financial |
Federated Max-cap and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Max-cap and Prudential Financial
The main advantage of trading using opposite Federated Max-cap and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Max-cap 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.| Federated Max-cap vs. Mesirow Financial Small | Federated Max-cap vs. Rmb Mendon Financial | Federated Max-cap vs. Vanguard Financials Index | Federated Max-cap vs. Putnam Global Financials |
| Prudential Financial vs. Nasdaq 100 Fund Class | Prudential Financial vs. Auer Growth Fund | Prudential Financial vs. Kirr Marbach Partners | Prudential Financial vs. Shelton Emerging Markets |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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