Correlation Between Prudential Health and Catalyst/millburn
Can any of the company-specific risk be diversified away by investing in both Prudential Health and Catalyst/millburn 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 Catalyst/millburn 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 Catalystmillburn Hedge Strategy, you can compare the effects of market volatilities on Prudential Health and Catalyst/millburn 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 Catalyst/millburn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Health and Catalyst/millburn.
Diversification Opportunities for Prudential Health and Catalyst/millburn
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Prudential and Catalyst/millburn is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Health Sciences and Catalystmillburn Hedge Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Hedge 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 Catalyst/millburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Hedge has no effect on the direction of Prudential Health i.e., Prudential Health and Catalyst/millburn go up and down completely randomly.
Pair Corralation between Prudential Health and Catalyst/millburn
Assuming the 90 days horizon Prudential Health Sciences is expected to under-perform the Catalyst/millburn. In addition to that, Prudential Health is 3.74 times more volatile than Catalystmillburn Hedge Strategy. It trades about -0.25 of its total potential returns per unit of risk. Catalystmillburn Hedge Strategy is currently generating about -0.13 per unit of volatility. If you would invest 4,014 in Catalystmillburn Hedge Strategy on October 10, 2024 and sell it today you would lose (94.00) from holding Catalystmillburn Hedge Strategy or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Health Sciences vs. Catalystmillburn Hedge Strateg
Performance |
| Timeline |
| Prudential Health |
| Catalystmillburn Hedge |
Prudential Health and Catalyst/millburn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Health and Catalyst/millburn
The main advantage of trading using opposite Prudential Health and Catalyst/millburn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Health position performs unexpectedly, Catalyst/millburn 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 Catalyst/millburn will offset losses from the drop in Catalyst/millburn's long position.| Prudential Health vs. Jhancock Diversified Macro | Prudential Health vs. Adams Diversified Equity | Prudential Health vs. Huber Capital Diversified | Prudential Health vs. Putnam Diversified Income |
| Catalyst/millburn vs. Calvert High Yield | Catalyst/millburn vs. Federated High Yield | Catalyst/millburn vs. Multi Manager High Yield | Catalyst/millburn vs. Artisan 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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