Correlation Between Elfun Government and Prudential Government
Can any of the company-specific risk be diversified away by investing in both Elfun Government and Prudential Government 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 Elfun Government and Prudential Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elfun Government Money and Prudential Government Income, you can compare the effects of market volatilities on Elfun Government and Prudential Government 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 Elfun Government with a short position of Prudential Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Government and Prudential Government.
Diversification Opportunities for Elfun Government and Prudential Government
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Elfun and Prudential is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Government Money and Prudential Government Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Government and Elfun Government 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 Elfun Government Money are associated (or correlated) with Prudential Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Government has no effect on the direction of Elfun Government i.e., Elfun Government and Prudential Government go up and down completely randomly.
Pair Corralation between Elfun Government and Prudential Government
Assuming the 90 days horizon Elfun Government Money is expected to generate 71.57 times more return on investment than Prudential Government. However, Elfun Government is 71.57 times more volatile than Prudential Government Income. It trades about 0.06 of its potential returns per unit of risk. Prudential Government Income is currently generating about 0.03 per unit of risk. If you would invest 366.00 in Elfun Government Money on September 12, 2024 and sell it today you would lose (266.00) from holding Elfun Government Money or give up 72.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 97.82% |
| Values | Daily Returns |
Elfun Government Money vs. Prudential Government Income
Performance |
| Timeline |
| Elfun Government Money |
| Prudential Government |
Elfun Government and Prudential Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elfun Government and Prudential Government
The main advantage of trading using opposite Elfun Government and Prudential Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun Government position performs unexpectedly, Prudential Government 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 Government will offset losses from the drop in Prudential Government's long position.| Elfun Government vs. Vanguard Total Stock | Elfun Government vs. Vanguard 500 Index | Elfun Government vs. Vanguard Total Stock | Elfun Government vs. Vanguard Total Stock |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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