Correlation Between Parametric Commodity and Prudential High
Can any of the company-specific risk be diversified away by investing in both Parametric Commodity and Prudential High 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 Parametric Commodity and Prudential High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parametric Modity Strategy and Prudential High Yield, you can compare the effects of market volatilities on Parametric Commodity and Prudential High 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 Parametric Commodity with a short position of Prudential High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parametric Commodity and Prudential High.
Diversification Opportunities for Parametric Commodity and Prudential High
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parametric and Prudential is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Parametric Modity Strategy and Prudential High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential High Yield and Parametric Commodity 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 Parametric Modity Strategy are associated (or correlated) with Prudential High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential High Yield has no effect on the direction of Parametric Commodity i.e., Parametric Commodity and Prudential High go up and down completely randomly.
Pair Corralation between Parametric Commodity and Prudential High
Assuming the 90 days horizon Parametric Commodity is expected to generate 1.97 times less return on investment than Prudential High. In addition to that, Parametric Commodity is 2.4 times more volatile than Prudential High Yield. It trades about 0.03 of its total potential returns per unit of risk. Prudential High Yield is currently generating about 0.12 per unit of volatility. If you would invest 404.00 in Prudential High Yield on August 24, 2024 and sell it today you would earn a total of 79.00 from holding Prudential High Yield or generate 19.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parametric Modity Strategy vs. Prudential High Yield
Performance |
| Timeline |
| Parametric Commodity |
| Prudential High Yield |
Parametric Commodity and Prudential High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parametric Commodity and Prudential High
The main advantage of trading using opposite Parametric Commodity and Prudential High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parametric Commodity position performs unexpectedly, Prudential High 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 High will offset losses from the drop in Prudential High's long position.| Parametric Commodity vs. Clarion Partners Real | Parametric Commodity vs. Lazard Global Listed | Parametric Commodity vs. Blackrock Commodity Strategies | Parametric Commodity vs. Franklin High Yield |
| Prudential High vs. Prudential Total Return | Prudential High vs. Metropolitan West Total | Prudential High vs. John Hancock Disciplined | Prudential High vs. Europacific Growth Fund |
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.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |