Correlation Between American Funds and Prudential Short
Can any of the company-specific risk be diversified away by investing in both American Funds and Prudential Short 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 American Funds and Prudential Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Prudential Short Duration, you can compare the effects of market volatilities on American Funds and Prudential Short 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 American Funds with a short position of Prudential Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Prudential Short.
Diversification Opportunities for American Funds and Prudential Short
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Prudential is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Prudential Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Short Duration and American Funds 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 American Funds American are associated (or correlated) with Prudential Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Short Duration has no effect on the direction of American Funds i.e., American Funds and Prudential Short go up and down completely randomly.
Pair Corralation between American Funds and Prudential Short
Assuming the 90 days horizon American Funds American is expected to generate 1.19 times more return on investment than Prudential Short. However, American Funds is 1.19 times more volatile than Prudential Short Duration. It trades about 0.2 of its potential returns per unit of risk. Prudential Short Duration is currently generating about 0.18 per unit of risk. If you would invest 882.00 in American Funds American on November 9, 2024 and sell it today you would earn a total of 105.00 from holding American Funds American or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Prudential Short Duration
Performance |
| Timeline |
| American Funds American |
| Prudential Short Duration |
American Funds and Prudential Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Prudential Short
The main advantage of trading using opposite American Funds and Prudential Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Prudential Short 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 Short will offset losses from the drop in Prudential Short's long position.| American Funds vs. Leader Short Term Bond | American Funds vs. Alpine Ultra Short | American Funds vs. Transam Short Term Bond | American Funds vs. Franklin Federal Limited Term |
| Prudential Short vs. Cref Money Market | Prudential Short vs. Blackstone Secured Lending | Prudential Short vs. Financials Ultrasector Profund | Prudential Short vs. Aig Government Money |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |