Correlation Between State Street and Prudential Global
Can any of the company-specific risk be diversified away by investing in both State Street and Prudential Global 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 State Street and Prudential Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Target and Prudential Global Total, you can compare the effects of market volatilities on State Street and Prudential Global 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 State Street with a short position of Prudential Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Prudential Global.
Diversification Opportunities for State Street and Prudential Global
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and Prudential is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding State Street Target and Prudential Global Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Global Total and State Street 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 State Street Target are associated (or correlated) with Prudential Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Global Total has no effect on the direction of State Street i.e., State Street and Prudential Global go up and down completely randomly.
Pair Corralation between State Street and Prudential Global
Assuming the 90 days horizon State Street Target is expected to generate 2.42 times more return on investment than Prudential Global. However, State Street is 2.42 times more volatile than Prudential Global Total. It trades about 0.25 of its potential returns per unit of risk. Prudential Global Total is currently generating about 0.24 per unit of risk. If you would invest 1,483 in State Street Target on May 23, 2025 and sell it today you would earn a total of 111.00 from holding State Street Target or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Target vs. Prudential Global Total
Performance |
| Timeline |
| State Street Target |
| Prudential Global Total |
State Street and Prudential Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Prudential Global
The main advantage of trading using opposite State Street and Prudential Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Prudential Global 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 Global will offset losses from the drop in Prudential Global's long position.| State Street vs. Aqr Diversified Arbitrage | State Street vs. Columbia Diversified Equity | State Street vs. Lord Abbett Diversified | State Street vs. Delaware Limited Term Diversified |
| Prudential Global vs. Legg Mason Bw | Prudential Global vs. Western Asset Diversified | Prudential Global vs. Columbia Diversified Equity | Prudential Global vs. Wells Fargo Diversified |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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