Correlation Between Fixed Income and Prudential Day
Can any of the company-specific risk be diversified away by investing in both Fixed Income and Prudential Day 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 Fixed Income and Prudential Day into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Fixed Income and Prudential Day One, you can compare the effects of market volatilities on Fixed Income and Prudential Day 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 Fixed Income with a short position of Prudential Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fixed Income and Prudential Day.
Diversification Opportunities for Fixed Income and Prudential Day
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fixed and Prudential is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding The Fixed Income and Prudential Day One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Day One and Fixed Income 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 The Fixed Income are associated (or correlated) with Prudential Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Day One has no effect on the direction of Fixed Income i.e., Fixed Income and Prudential Day go up and down completely randomly.
Pair Corralation between Fixed Income and Prudential Day
Assuming the 90 days horizon The Fixed Income is expected to generate 0.85 times more return on investment than Prudential Day. However, The Fixed Income is 1.18 times less risky than Prudential Day. It trades about 0.12 of its potential returns per unit of risk. Prudential Day One is currently generating about 0.07 per unit of risk. If you would invest 596.00 in The Fixed Income on September 12, 2024 and sell it today you would earn a total of 149.00 from holding The Fixed Income or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Fixed Income vs. Prudential Day One
Performance |
| Timeline |
| Fixed Income |
| Prudential Day One |
Fixed Income and Prudential Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fixed Income and Prudential Day
The main advantage of trading using opposite Fixed Income and Prudential Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fixed Income position performs unexpectedly, Prudential Day 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 Day will offset losses from the drop in Prudential Day's long position.| Fixed Income vs. Goldman Sachs Government | Fixed Income vs. Davis Government Bond | Fixed Income vs. Inverse Government Long | Fixed Income vs. Schwab Government Money |
| Prudential Day vs. Royce Opportunity Fund | Prudential Day vs. Victory Rs Partners | Prudential Day vs. Lsv Small Cap | Prudential Day vs. Applied Finance Explorer |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |