Correlation Between Prudential Government and Mainstay Balanced
Can any of the company-specific risk be diversified away by investing in both Prudential Government and Mainstay Balanced 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 Mainstay Balanced 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 Mainstay Balanced Fund, you can compare the effects of market volatilities on Prudential Government and Mainstay Balanced 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 Mainstay Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Government and Mainstay Balanced.
Diversification Opportunities for Prudential Government and Mainstay Balanced
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and Mainstay is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Government Income and Mainstay Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Balanced 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 Mainstay Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Balanced has no effect on the direction of Prudential Government i.e., Prudential Government and Mainstay Balanced go up and down completely randomly.
Pair Corralation between Prudential Government and Mainstay Balanced
Assuming the 90 days horizon Prudential Government Income is expected to generate 0.27 times more return on investment than Mainstay Balanced. However, Prudential Government Income is 3.66 times less risky than Mainstay Balanced. It trades about 0.21 of its potential returns per unit of risk. Mainstay Balanced Fund is currently generating about -0.22 per unit of risk. If you would invest 780.00 in Prudential Government Income on September 13, 2024 and sell it today you would earn a total of 9.00 from holding Prudential Government Income or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Government Income vs. Mainstay Balanced Fund
Performance |
| Timeline |
| Prudential Government |
| Mainstay Balanced |
Prudential Government and Mainstay Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Government and Mainstay Balanced
The main advantage of trading using opposite Prudential Government and Mainstay Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Government position performs unexpectedly, Mainstay Balanced 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 Mainstay Balanced will offset losses from the drop in Mainstay Balanced's long position.| Prudential Government vs. Washington Mutual Investors | Prudential Government vs. Aqr Large Cap | Prudential Government vs. T Rowe Price | Prudential Government vs. Qs Large Cap |
| Mainstay Balanced vs. Mainstay Tax Free | Mainstay Balanced vs. Mainstay Large Cap | Mainstay Balanced vs. Mainstay Large Cap | Mainstay Balanced vs. Mainstay Large Cap |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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