Correlation Between Prudential Real and Mainstay Government
Can any of the company-specific risk be diversified away by investing in both Prudential Real and Mainstay 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 Prudential Real and Mainstay Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Real Estate and Mainstay Government Fund, you can compare the effects of market volatilities on Prudential Real and Mainstay 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 Prudential Real with a short position of Mainstay Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Real and Mainstay Government.
Diversification Opportunities for Prudential Real and Mainstay Government
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Prudential and Mainstay is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Real Estate and Mainstay Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Government and Prudential Real 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 Real Estate are associated (or correlated) with Mainstay Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Government has no effect on the direction of Prudential Real i.e., Prudential Real and Mainstay Government go up and down completely randomly.
Pair Corralation between Prudential Real and Mainstay Government
Assuming the 90 days horizon Prudential Real Estate is expected to generate 1.98 times more return on investment than Mainstay Government. However, Prudential Real is 1.98 times more volatile than Mainstay Government Fund. It trades about 0.17 of its potential returns per unit of risk. Mainstay Government Fund is currently generating about 0.14 per unit of risk. If you would invest 800.00 in Prudential Real Estate on September 4, 2024 and sell it today you would earn a total of 18.00 from holding Prudential Real Estate or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Real Estate vs. Mainstay Government Fund
Performance |
| Timeline |
| Prudential Real Estate |
| Mainstay Government |
Prudential Real and Mainstay Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Real and Mainstay Government
The main advantage of trading using opposite Prudential Real and Mainstay Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Real position performs unexpectedly, Mainstay 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 Mainstay Government will offset losses from the drop in Mainstay Government's long position.| Prudential Real vs. Realty Income | Prudential Real vs. Dynex Capital | Prudential Real vs. First Industrial Realty | Prudential Real vs. Healthcare Realty Trust |
| Mainstay Government vs. Mainstay Tax Free | Mainstay Government vs. Mainstay Large Cap | Mainstay Government vs. Mainstay Large Cap | Mainstay Government vs. Mainstay Large Cap |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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