Correlation Between Prudential High and American Growth
Can any of the company-specific risk be diversified away by investing in both Prudential High and American Growth 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 High and American Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential High Yield and American Growth Fund, you can compare the effects of market volatilities on Prudential High and American Growth 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 High with a short position of American Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential High and American Growth.
Diversification Opportunities for Prudential High and American Growth
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Prudential and American is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Prudential High Yield and American Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Growth and Prudential High 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 High Yield are associated (or correlated) with American Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Growth has no effect on the direction of Prudential High i.e., Prudential High and American Growth go up and down completely randomly.
Pair Corralation between Prudential High and American Growth
Assuming the 90 days horizon Prudential High Yield is expected to generate 0.23 times more return on investment than American Growth. However, Prudential High Yield is 4.38 times less risky than American Growth. It trades about 0.17 of its potential returns per unit of risk. American Growth Fund is currently generating about 0.03 per unit of risk. If you would invest 418.00 in Prudential High Yield on September 12, 2024 and sell it today you would earn a total of 67.00 from holding Prudential High Yield or generate 16.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential High Yield vs. American Growth Fund
Performance |
| Timeline |
| Prudential High Yield |
| American Growth |
Prudential High and American Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential High and American Growth
The main advantage of trading using opposite Prudential High and American Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential High position performs unexpectedly, American Growth 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 American Growth will offset losses from the drop in American Growth's long position.| Prudential High vs. SCOR PK | Prudential High vs. Morningstar Unconstrained Allocation | Prudential High vs. Via Renewables | Prudential High vs. Bondbloxx ETF Trust |
| American Growth vs. Prudential High Yield | American Growth vs. Msift High Yield | American Growth vs. T Rowe Price | American Growth vs. Payden High Income |
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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