Correlation Between Prudential Short and Western Asset
Can any of the company-specific risk be diversified away by investing in both Prudential Short and Western Asset 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 Western Asset 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 Western Asset Inflation, you can compare the effects of market volatilities on Prudential Short and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Short and Western Asset.
Diversification Opportunities for Prudential Short and Western Asset
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Prudential and Western is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Short Duration and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Prudential Short i.e., Prudential Short and Western Asset go up and down completely randomly.
Pair Corralation between Prudential Short and Western Asset
Assuming the 90 days horizon Prudential Short Duration is expected to generate 0.6 times more return on investment than Western Asset. However, Prudential Short Duration is 1.65 times less risky than Western Asset. It trades about 0.16 of its potential returns per unit of risk. Western Asset Inflation is currently generating about 0.04 per unit of risk. If you would invest 782.00 in Prudential Short Duration on September 12, 2024 and sell it today you would earn a total of 64.00 from holding Prudential Short Duration or generate 8.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Prudential Short Duration vs. Western Asset Inflation
Performance |
| Timeline |
| Prudential Short Duration |
| Western Asset Inflation |
Prudential Short and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Short and Western Asset
The main advantage of trading using opposite Prudential Short and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Short position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Prudential Short vs. SCOR PK | Prudential Short vs. Morningstar Unconstrained Allocation | Prudential Short vs. Via Renewables | Prudential Short vs. Bondbloxx ETF Trust |
| Western Asset vs. Kentucky Tax Free Short To Medium | Western Asset vs. Angel Oak Ultrashort | Western Asset vs. Alpine Ultra Short | Western Asset vs. Prudential Short Duration |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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