Correlation Between Prudential Government and Elfun Government
Can any of the company-specific risk be diversified away by investing in both Prudential Government and Elfun Government 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 Government and Elfun Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Government Money and Elfun Government Money, you can compare the effects of market volatilities on Prudential Government and Elfun Government 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 Government with a short position of Elfun Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Government and Elfun Government.
Diversification Opportunities for Prudential Government and Elfun Government
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Prudential and Elfun is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Government Money and Elfun Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elfun Government Money and Prudential Government 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 Government Money are associated (or correlated) with Elfun Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elfun Government Money has no effect on the direction of Prudential Government i.e., Prudential Government and Elfun Government go up and down completely randomly.
Pair Corralation between Prudential Government and Elfun Government
Assuming the 90 days horizon Prudential Government is expected to generate 1187.31 times less return on investment than Elfun Government. But when comparing it to its historical volatility, Prudential Government Money is 54.72 times less risky than Elfun Government. It trades about 0.0 of its potential returns per unit of risk. Elfun Government Money is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 328.00 in Elfun Government Money on September 4, 2024 and sell it today you would lose (228.00) from holding Elfun Government Money or give up 69.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 87.33% |
| Values | Daily Returns |
Prudential Government Money vs. Elfun Government Money
Performance |
| Timeline |
| Prudential Government |
| Elfun Government Money |
Prudential Government and Elfun Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Government and Elfun Government
The main advantage of trading using opposite Prudential Government and Elfun Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Government position performs unexpectedly, Elfun Government 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 Elfun Government will offset losses from the drop in Elfun Government's long position.| Prudential Government vs. Vanguard Total Stock | Prudential Government vs. Vanguard 500 Index | Prudential Government vs. Vanguard Total Stock | Prudential Government vs. Vanguard Total Stock |
| Elfun Government vs. Dreyfus Natural Resources | Elfun Government vs. Gamco Natural Resources | Elfun Government vs. Adams Natural Resources | Elfun Government vs. Gmo Resources |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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