Correlation Between Money Market and Prudential Government
Can any of the company-specific risk be diversified away by investing in both Money Market and Prudential 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 Money Market and Prudential Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Money Market Obligations and Prudential Government Money, you can compare the effects of market volatilities on Money Market and Prudential 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 Money Market with a short position of Prudential Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Money Market and Prudential Government.
Diversification Opportunities for Money Market and Prudential Government
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Money and Prudential is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Money Market Obligations and Prudential Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Government and Money Market 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 Money Market Obligations are associated (or correlated) with Prudential Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Government has no effect on the direction of Money Market i.e., Money Market and Prudential Government go up and down completely randomly.
Pair Corralation between Money Market and Prudential Government
If you would invest 100.00 in Prudential Government Money on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Prudential Government Money or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Money Market Obligations vs. Prudential Government Money
Performance |
| Timeline |
| Money Market Obligations |
| Prudential Government |
Money Market and Prudential Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Money Market and Prudential Government
The main advantage of trading using opposite Money Market and Prudential Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Money Market position performs unexpectedly, Prudential 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 Prudential Government will offset losses from the drop in Prudential Government's long position.| Money Market vs. Vanguard Total Stock | Money Market vs. Vanguard 500 Index | Money Market vs. Vanguard Total Stock | Money Market vs. Vanguard Total Stock |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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