Correlation Between Prudential California and Multimanager Lifestyle
Can any of the company-specific risk be diversified away by investing in both Prudential California and Multimanager Lifestyle 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 California and Multimanager Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential California Muni and Multimanager Lifestyle Servative, you can compare the effects of market volatilities on Prudential California and Multimanager Lifestyle 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 California with a short position of Multimanager Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential California and Multimanager Lifestyle.
Diversification Opportunities for Prudential California and Multimanager Lifestyle
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and Multimanager is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Prudential California Muni and Multimanager Lifestyle Servati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimanager Lifestyle and Prudential California 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 California Muni are associated (or correlated) with Multimanager Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimanager Lifestyle has no effect on the direction of Prudential California i.e., Prudential California and Multimanager Lifestyle go up and down completely randomly.
Pair Corralation between Prudential California and Multimanager Lifestyle
Assuming the 90 days horizon Prudential California is expected to generate 6.25 times less return on investment than Multimanager Lifestyle. But when comparing it to its historical volatility, Prudential California Muni is 2.03 times less risky than Multimanager Lifestyle. It trades about 0.08 of its potential returns per unit of risk. Multimanager Lifestyle Servative is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,175 in Multimanager Lifestyle Servative on November 7, 2024 and sell it today you would earn a total of 15.00 from holding Multimanager Lifestyle Servative or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential California Muni vs. Multimanager Lifestyle Servati
Performance |
| Timeline |
| Prudential California |
| Multimanager Lifestyle |
Prudential California and Multimanager Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential California and Multimanager Lifestyle
The main advantage of trading using opposite Prudential California and Multimanager Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential California position performs unexpectedly, Multimanager Lifestyle 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 Multimanager Lifestyle will offset losses from the drop in Multimanager Lifestyle's long position.| Prudential California vs. Transamerica Financial Life | Prudential California vs. Financial Industries Fund | Prudential California vs. Icon Financial Fund | Prudential California vs. Davis Financial Fund |
| Multimanager Lifestyle vs. Chestnut Street Exchange | Multimanager Lifestyle vs. Aig Government Money | Multimanager Lifestyle vs. Edward Jones Money | Multimanager Lifestyle vs. Hsbc Treasury 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |