Correlation Between Auer Growth and Prudential Absolute
Can any of the company-specific risk be diversified away by investing in both Auer Growth and Prudential Absolute 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 Auer Growth and Prudential Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auer Growth Fund and Prudential Absolute Return, you can compare the effects of market volatilities on Auer Growth and Prudential Absolute 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 Auer Growth with a short position of Prudential Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auer Growth and Prudential Absolute.
Diversification Opportunities for Auer Growth and Prudential Absolute
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Auer and Prudential is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Auer Growth Fund and Prudential Absolute Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Absolute and Auer Growth 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 Auer Growth Fund are associated (or correlated) with Prudential Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Absolute has no effect on the direction of Auer Growth i.e., Auer Growth and Prudential Absolute go up and down completely randomly.
Pair Corralation between Auer Growth and Prudential Absolute
Assuming the 90 days horizon Auer Growth Fund is expected to generate 8.16 times more return on investment than Prudential Absolute. However, Auer Growth is 8.16 times more volatile than Prudential Absolute Return. It trades about 0.06 of its potential returns per unit of risk. Prudential Absolute Return is currently generating about 0.18 per unit of risk. If you would invest 1,651 in Auer Growth Fund on September 3, 2024 and sell it today you would earn a total of 118.00 from holding Auer Growth Fund or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auer Growth Fund vs. Prudential Absolute Return
Performance |
| Timeline |
| Auer Growth Fund |
| Prudential Absolute |
Auer Growth and Prudential Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auer Growth and Prudential Absolute
The main advantage of trading using opposite Auer Growth and Prudential Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auer Growth position performs unexpectedly, Prudential Absolute 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 Absolute will offset losses from the drop in Prudential Absolute's long position.| Auer Growth vs. Lebenthal Lisanti Small | Auer Growth vs. Hodges Small Cap | Auer Growth vs. Schwartz Value Focused | Auer Growth vs. Oberweis Small Cap Opportunities |
| Prudential Absolute vs. Pace High Yield | Prudential Absolute vs. Guggenheim High Yield | Prudential Absolute vs. Needham Aggressive Growth | Prudential Absolute vs. Morningstar Aggressive Growth |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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