Correlation Between Prudential Short and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Prudential Short and Emerging Markets 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 Short and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Short Duration and Emerging Markets Debt, you can compare the effects of market volatilities on Prudential Short and Emerging Markets 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 Short with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Short and Emerging Markets.
Diversification Opportunities for Prudential Short and Emerging Markets
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Prudential and Emerging is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Short Duration and Emerging Markets Debt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Debt and Prudential Short 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 Short Duration are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Debt has no effect on the direction of Prudential Short i.e., Prudential Short and Emerging Markets go up and down completely randomly.
Pair Corralation between Prudential Short and Emerging Markets
Assuming the 90 days horizon Prudential Short Duration is expected to generate 0.68 times more return on investment than Emerging Markets. However, Prudential Short Duration is 1.48 times less risky than Emerging Markets. It trades about 0.31 of its potential returns per unit of risk. Emerging Markets Debt is currently generating about 0.02 per unit of risk. If you would invest 832.00 in Prudential Short Duration on October 20, 2024 and sell it today you would earn a total of 9.00 from holding Prudential Short Duration or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Short Duration vs. Emerging Markets Debt
Performance |
| Timeline |
| Prudential Short Duration |
| Emerging Markets Debt |
Prudential Short and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Short and Emerging Markets
The main advantage of trading using opposite Prudential Short and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Short position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Prudential Short vs. World Precious Minerals | Prudential Short vs. The Gold Bullion | Prudential Short vs. Global Gold Fund | Prudential Short vs. Sprott Gold Equity |
| Emerging Markets vs. Franklin Emerging Market | Emerging Markets vs. Delaware Limited Term Diversified | Emerging Markets vs. Locorr Market Trend | Emerging Markets vs. Barings Emerging Markets |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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