Correlation Between Prudential Health and Great-west Core
Can any of the company-specific risk be diversified away by investing in both Prudential Health and Great-west Core 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 Health and Great-west Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Health Sciences and Great West E Strategies, you can compare the effects of market volatilities on Prudential Health and Great-west Core 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 Health with a short position of Great-west Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Health and Great-west Core.
Diversification Opportunities for Prudential Health and Great-west Core
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prudential and Great-west is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Health Sciences and Great West E Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great-west Core and Prudential Health 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 Health Sciences are associated (or correlated) with Great-west Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great-west Core has no effect on the direction of Prudential Health i.e., Prudential Health and Great-west Core go up and down completely randomly.
Pair Corralation between Prudential Health and Great-west Core
Assuming the 90 days horizon Prudential Health Sciences is expected to under-perform the Great-west Core. But the mutual fund apears to be less risky and, when comparing its historical volatility, Prudential Health Sciences is 1.38 times less risky than Great-west Core. The mutual fund trades about -0.26 of its potential returns per unit of risk. The Great West E Strategies is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 1,534 in Great West E Strategies on January 21, 2025 and sell it today you would lose (131.00) from holding Great West E Strategies or give up 8.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Health Sciences vs. Great West E Strategies
Performance |
| Timeline |
| Prudential Health |
| Great-west Core |
Prudential Health and Great-west Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Health and Great-west Core
The main advantage of trading using opposite Prudential Health and Great-west Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Health position performs unexpectedly, Great-west Core 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 Great-west Core will offset losses from the drop in Great-west Core's long position.The idea behind Prudential Health Sciences and Great West E Strategies 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.
| Great-west Core vs. Great West Securefoundation Balanced | Great-west Core vs. Great West Lifetime 2020 | Great-west Core vs. Great West Lifetime 2020 | Great-west Core vs. Great West Lifetime 2020 |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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