Correlation Between Fabxx and Prudential Muni
Can any of the company-specific risk be diversified away by investing in both Fabxx and Prudential Muni 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 Fabxx and Prudential Muni into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabxx and Prudential Muni High, you can compare the effects of market volatilities on Fabxx and Prudential Muni 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 Fabxx with a short position of Prudential Muni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabxx and Prudential Muni.
Diversification Opportunities for Fabxx and Prudential Muni
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fabxx and Prudential is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fabxx and Prudential Muni High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Muni High and Fabxx 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 Fabxx are associated (or correlated) with Prudential Muni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Muni High has no effect on the direction of Fabxx i.e., Fabxx and Prudential Muni go up and down completely randomly.
Pair Corralation between Fabxx and Prudential Muni
Assuming the 90 days horizon Fabxx is expected to under-perform the Prudential Muni. In addition to that, Fabxx is 80.54 times more volatile than Prudential Muni High. It trades about -0.22 of its total potential returns per unit of risk. Prudential Muni High is currently generating about 0.27 per unit of volatility. If you would invest 955.00 in Prudential Muni High on September 12, 2024 and sell it today you would earn a total of 8.00 from holding Prudential Muni High or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fabxx vs. Prudential Muni High
Performance |
| Timeline |
| Fabxx |
| Prudential Muni High |
Fabxx and Prudential Muni Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabxx and Prudential Muni
The main advantage of trading using opposite Fabxx and Prudential Muni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabxx position performs unexpectedly, Prudential Muni 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 Muni will offset losses from the drop in Prudential Muni's long position.| Fabxx vs. Vanguard Total Stock | Fabxx vs. Vanguard 500 Index | Fabxx vs. Vanguard Total Stock | Fabxx vs. Vanguard Total Stock |
| Prudential Muni vs. Gabelli Convertible And | Prudential Muni vs. Virtus Convertible | Prudential Muni vs. Calamos Dynamic Convertible | Prudential Muni vs. Allianzgi Convertible Income |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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