Correlation Between Prudential High and Baron Small
Can any of the company-specific risk be diversified away by investing in both Prudential High and Baron Small 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 Baron Small 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 Baron Small Cap, you can compare the effects of market volatilities on Prudential High and Baron Small 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 Baron Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential High and Baron Small.
Diversification Opportunities for Prudential High and Baron Small
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PRUDENTIAL and Baron is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Prudential High Yield and Baron Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Small Cap 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 Baron Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Small Cap has no effect on the direction of Prudential High i.e., Prudential High and Baron Small go up and down completely randomly.
Pair Corralation between Prudential High and Baron Small
Assuming the 90 days horizon Prudential High Yield is expected to generate 0.1 times more return on investment than Baron Small. However, Prudential High Yield is 9.91 times less risky than Baron Small. It trades about 0.11 of its potential returns per unit of risk. Baron Small Cap is currently generating about -0.03 per unit of risk. If you would invest 476.00 in Prudential High Yield on November 1, 2024 and sell it today you would earn a total of 6.00 from holding Prudential High Yield or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential High Yield vs. Baron Small Cap
Performance |
| Timeline |
| Prudential High Yield |
| Baron Small Cap |
Prudential High and Baron Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential High and Baron Small
The main advantage of trading using opposite Prudential High and Baron Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential High position performs unexpectedly, Baron Small 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 Baron Small will offset losses from the drop in Baron Small's long position.| Prudential High vs. Prudential Total Return | Prudential High vs. Metropolitan West Total | Prudential High vs. John Hancock Disciplined | Prudential High vs. Europacific Growth Fund |
| Baron Small vs. Access Flex High | Baron Small vs. Millerhoward High Income | Baron Small vs. Siit High Yield | Baron Small vs. Prudential High Yield |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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