Correlation Between Prudential Global and Balanced Fund
Can any of the company-specific risk be diversified away by investing in both Prudential Global and Balanced Fund 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 Global and Balanced Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Global Total and Balanced Fund Retail, you can compare the effects of market volatilities on Prudential Global and Balanced Fund 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 Global with a short position of Balanced Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Global and Balanced Fund.
Diversification Opportunities for Prudential Global and Balanced Fund
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and Balanced is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Global Total and Balanced Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Retail and Prudential Global 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 Global Total are associated (or correlated) with Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Retail has no effect on the direction of Prudential Global i.e., Prudential Global and Balanced Fund go up and down completely randomly.
Pair Corralation between Prudential Global and Balanced Fund
Assuming the 90 days horizon Prudential Global is expected to generate 2.63 times less return on investment than Balanced Fund. But when comparing it to its historical volatility, Prudential Global Total is 1.29 times less risky than Balanced Fund. It trades about 0.06 of its potential returns per unit of risk. Balanced Fund Retail is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,442 in Balanced Fund Retail on September 13, 2024 and sell it today you would earn a total of 14.00 from holding Balanced Fund Retail or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Prudential Global Total vs. Balanced Fund Retail
Performance |
| Timeline |
| Prudential Global Total |
| Balanced Fund Retail |
Prudential Global and Balanced Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Global and Balanced Fund
The main advantage of trading using opposite Prudential Global and Balanced Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Global position performs unexpectedly, Balanced Fund 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 Balanced Fund will offset losses from the drop in Balanced Fund's long position.The idea behind Prudential Global Total and Balanced Fund Retail 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.
| Balanced Fund vs. Muirfield Fund Retail | Balanced Fund vs. Dynamic Growth Fund | Balanced Fund vs. Infrastructure Fund Retail | Balanced Fund vs. Quantex Fund Retail |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |