Correlation Between Prudential Core and Capital Group
Can any of the company-specific risk be diversified away by investing in both Prudential Core and Capital Group 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 Core and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Core Conservative and Capital Group Equity, you can compare the effects of market volatilities on Prudential Core and Capital Group 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 Core with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Core and Capital Group.
Diversification Opportunities for Prudential Core and Capital Group
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prudential and Capital is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Core Conservative and Capital Group Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Equity and Prudential Core 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 Core Conservative are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Equity has no effect on the direction of Prudential Core i.e., Prudential Core and Capital Group go up and down completely randomly.
Pair Corralation between Prudential Core and Capital Group
Assuming the 90 days horizon Prudential Core is expected to generate 5.71 times less return on investment than Capital Group. But when comparing it to its historical volatility, Prudential Core Conservative is 1.73 times less risky than Capital Group. It trades about 0.03 of its potential returns per unit of risk. Capital Group Equity is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,661 in Capital Group Equity on September 3, 2024 and sell it today you would earn a total of 1,119 from holding Capital Group Equity or generate 42.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Core Conservative vs. Capital Group Equity
Performance |
| Timeline |
| Prudential Core Cons |
| Capital Group Equity |
Prudential Core and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Core and Capital Group
The main advantage of trading using opposite Prudential Core and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Core position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| Prudential Core vs. Fidelity Sai Inflationfocused | Prudential Core vs. Blackrock Inflation Protected | Prudential Core vs. Tiaa Cref Inflation Linked Bond | Prudential Core vs. Western Asset Inflation |
| Capital Group vs. Wilmington Funds | Capital Group vs. First American Funds | Capital Group vs. Wells Fargo Funds | Capital Group vs. Prudential Government Money |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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