Correlation Between Prudential Muni and Prudential Commodity
Can any of the company-specific risk be diversified away by investing in both Prudential Muni and Prudential Commodity 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 Muni and Prudential Commodity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Muni High and Prudential Commodity Strategies, you can compare the effects of market volatilities on Prudential Muni and Prudential Commodity 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 Muni with a short position of Prudential Commodity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Muni and Prudential Commodity.
Diversification Opportunities for Prudential Muni and Prudential Commodity
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and Prudential is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Muni High and Prudential Commodity Strategie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Commodity and Prudential Muni 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 Muni High are associated (or correlated) with Prudential Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Commodity has no effect on the direction of Prudential Muni i.e., Prudential Muni and Prudential Commodity go up and down completely randomly.
Pair Corralation between Prudential Muni and Prudential Commodity
Assuming the 90 days horizon Prudential Muni High is expected to generate 0.38 times more return on investment than Prudential Commodity. However, Prudential Muni High is 2.6 times less risky than Prudential Commodity. It trades about 0.07 of its potential returns per unit of risk. Prudential Commodity Strategies is currently generating about 0.01 per unit of risk. If you would invest 852.00 in Prudential Muni High on November 2, 2024 and sell it today you would earn a total of 96.00 from holding Prudential Muni High or generate 11.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Muni High vs. Prudential Commodity Strategie
Performance |
| Timeline |
| Prudential Muni High |
| Prudential Commodity |
Prudential Muni and Prudential Commodity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Muni and Prudential Commodity
The main advantage of trading using opposite Prudential Muni and Prudential Commodity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Muni position performs unexpectedly, Prudential Commodity 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 Prudential Commodity will offset losses from the drop in Prudential Commodity's long position.| Prudential Muni vs. Calamos Dynamic Convertible | Prudential Muni vs. Putnam Convertible Securities | Prudential Muni vs. Absolute Convertible Arbitrage | Prudential Muni vs. Allianzgi Convertible Income |
| Prudential Commodity vs. Morgan Stanley Emerging | Prudential Commodity vs. Vy Jpmorgan Emerging | Prudential Commodity vs. Nasdaq 100 2x Strategy | Prudential Commodity vs. Siit Emerging Markets |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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