Correlation Between Prudential Government and Lifex Inflation-protec
Can any of the company-specific risk be diversified away by investing in both Prudential Government and Lifex Inflation-protec 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 Lifex Inflation-protec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Government Income and Lifex Inflation Protected Income, you can compare the effects of market volatilities on Prudential Government and Lifex Inflation-protec 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 Lifex Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Government and Lifex Inflation-protec.
Diversification Opportunities for Prudential Government and Lifex Inflation-protec
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and Lifex is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Government Income and Lifex Inflation Protected Inco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Inflation-protec 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 Income are associated (or correlated) with Lifex Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Inflation-protec has no effect on the direction of Prudential Government i.e., Prudential Government and Lifex Inflation-protec go up and down completely randomly.
Pair Corralation between Prudential Government and Lifex Inflation-protec
Assuming the 90 days horizon Prudential Government is expected to generate 2.0 times less return on investment than Lifex Inflation-protec. In addition to that, Prudential Government is 1.09 times more volatile than Lifex Inflation Protected Income. It trades about 0.03 of its total potential returns per unit of risk. Lifex Inflation Protected Income is currently generating about 0.06 per unit of volatility. If you would invest 1,890 in Lifex Inflation Protected Income on August 30, 2024 and sell it today you would earn a total of 103.00 from holding Lifex Inflation Protected Income or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 44.24% |
| Values | Daily Returns |
Prudential Government Income vs. Lifex Inflation Protected Inco
Performance |
| Timeline |
| Prudential Government |
| Lifex Inflation-protec |
Prudential Government and Lifex Inflation-protec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Government and Lifex Inflation-protec
The main advantage of trading using opposite Prudential Government and Lifex Inflation-protec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Government position performs unexpectedly, Lifex Inflation-protec 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 Lifex Inflation-protec will offset losses from the drop in Lifex Inflation-protec's long position.The idea behind Prudential Government Income and Lifex Inflation Protected Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Lifex Inflation-protec vs. John Hancock Government | Lifex Inflation-protec vs. Us Government Plus | Lifex Inflation-protec vs. Virtus Seix Government | Lifex Inflation-protec vs. Us Government Securities |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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