Correlation Between Prudential Emerging and Nebraska Municipal
Can any of the company-specific risk be diversified away by investing in both Prudential Emerging and Nebraska Municipal 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 Prudential Emerging and Nebraska Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Emerging Markets and Nebraska Municipal Fund, you can compare the effects of market volatilities on Prudential Emerging and Nebraska Municipal 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 Prudential Emerging with a short position of Nebraska Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Emerging and Nebraska Municipal.
Diversification Opportunities for Prudential Emerging and Nebraska Municipal
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and Nebraska is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Emerging Markets and Nebraska Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nebraska Municipal and Prudential Emerging 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 Prudential Emerging Markets are associated (or correlated) with Nebraska Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nebraska Municipal has no effect on the direction of Prudential Emerging i.e., Prudential Emerging and Nebraska Municipal go up and down completely randomly.
Pair Corralation between Prudential Emerging and Nebraska Municipal
Assuming the 90 days horizon Prudential Emerging Markets is expected to under-perform the Nebraska Municipal. In addition to that, Prudential Emerging is 1.21 times more volatile than Nebraska Municipal Fund. It trades about -0.07 of its total potential returns per unit of risk. Nebraska Municipal Fund is currently generating about 0.18 per unit of volatility. If you would invest 930.00 in Nebraska Municipal Fund on September 3, 2024 and sell it today you would earn a total of 13.00 from holding Nebraska Municipal Fund or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Emerging Markets vs. Nebraska Municipal Fund
Performance |
| Timeline |
| Prudential Emerging |
| Nebraska Municipal |
Prudential Emerging and Nebraska Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Emerging and Nebraska Municipal
The main advantage of trading using opposite Prudential Emerging and Nebraska Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Emerging position performs unexpectedly, Nebraska Municipal 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 Nebraska Municipal will offset losses from the drop in Nebraska Municipal's long position.| Prudential Emerging vs. Boston Partners Small | Prudential Emerging vs. Pace Smallmedium Value | Prudential Emerging vs. Heartland Value Plus | Prudential Emerging vs. Ultrasmall Cap Profund Ultrasmall Cap |
| Nebraska Municipal vs. Touchstone Ultra Short | Nebraska Municipal vs. Aqr Long Short Equity | Nebraska Municipal vs. Astor Longshort Fund | Nebraska Municipal vs. Quantitative Longshort Equity |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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