Correlation Between Prudential Muni and Elfun Government
Can any of the company-specific risk be diversified away by investing in both Prudential Muni 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 Muni 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 Muni High and Elfun Government Money, you can compare the effects of market volatilities on Prudential Muni 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 Muni with a short position of Elfun Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Muni and Elfun Government.
Diversification Opportunities for Prudential Muni 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 Muni High 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 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 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 Muni i.e., Prudential Muni and Elfun Government go up and down completely randomly.
Pair Corralation between Prudential Muni and Elfun Government
Assuming the 90 days horizon Prudential Muni High is expected to generate 1.26 times more return on investment than Elfun Government. However, Prudential Muni is 1.26 times more volatile than Elfun Government Money. It trades about 0.11 of its potential returns per unit of risk. Elfun Government Money is currently generating about 0.04 per unit of risk. If you would invest 932.00 in Prudential Muni High on September 12, 2024 and sell it today you would earn a total of 31.00 from holding Prudential Muni High or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 97.66% |
| Values | Daily Returns |
Prudential Muni High vs. Elfun Government Money
Performance |
| Timeline |
| Prudential Muni High |
| Elfun Government Money |
Prudential Muni and Elfun Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Muni and Elfun Government
The main advantage of trading using opposite Prudential Muni and Elfun Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Muni 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 Muni vs. Elfun Government Money | Prudential Muni vs. Chestnut Street Exchange | Prudential Muni vs. Schwab Treasury Money | Prudential Muni vs. Putnam Money Market |
| Elfun Government vs. Vanguard Total Stock | Elfun Government vs. Vanguard 500 Index | Elfun Government vs. Vanguard Total Stock | Elfun Government vs. Vanguard Total Stock |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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