Correlation Between Floating Rate and Prudential Floating
Can any of the company-specific risk be diversified away by investing in both Floating Rate and Prudential Floating 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 Floating Rate and Prudential Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floating Rate Fund and Prudential Floating Rate, you can compare the effects of market volatilities on Floating Rate and Prudential Floating 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 Floating Rate with a short position of Prudential Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floating Rate and Prudential Floating.
Diversification Opportunities for Floating Rate and Prudential Floating
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Floating and Prudential is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Floating Rate Fund and Prudential Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Floating Rate and Floating Rate 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 Floating Rate Fund are associated (or correlated) with Prudential Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Floating Rate has no effect on the direction of Floating Rate i.e., Floating Rate and Prudential Floating go up and down completely randomly.
Pair Corralation between Floating Rate and Prudential Floating
Assuming the 90 days horizon Floating Rate is expected to generate 1.03 times less return on investment than Prudential Floating. But when comparing it to its historical volatility, Floating Rate Fund is 1.14 times less risky than Prudential Floating. It trades about 0.23 of its potential returns per unit of risk. Prudential Floating Rate is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 755.00 in Prudential Floating Rate on September 2, 2024 and sell it today you would earn a total of 160.00 from holding Prudential Floating Rate or generate 21.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Floating Rate Fund vs. Prudential Floating Rate
Performance |
| Timeline |
| Floating Rate |
| Prudential Floating Rate |
Floating Rate and Prudential Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floating Rate and Prudential Floating
The main advantage of trading using opposite Floating Rate and Prudential Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floating Rate position performs unexpectedly, Prudential Floating 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 Floating will offset losses from the drop in Prudential Floating's long position.| Floating Rate vs. Transamerica Cleartrack Retirement | Floating Rate vs. Franklin Lifesmart Retirement | Floating Rate vs. Tiaa Cref Lifestyle Moderate | Floating Rate vs. Saat Moderate Strategy |
| Prudential Floating vs. Prudential High Yield | Prudential Floating vs. Prudential Short Duration | Prudential Floating vs. Prudential Total Return | Prudential Floating vs. Prudential Short Term Porate |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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