Correlation Between Prudential Real and Global Multi-strategy
Can any of the company-specific risk be diversified away by investing in both Prudential Real and Global Multi-strategy 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 Global Multi-strategy 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 Global Multi Strategy Fund, you can compare the effects of market volatilities on Prudential Real and Global Multi-strategy 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 Global Multi-strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Real and Global Multi-strategy.
Diversification Opportunities for Prudential Real and Global Multi-strategy
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prudential and Global is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Real Estate and Global Multi Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Multi Strategy 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 Global Multi-strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Multi Strategy has no effect on the direction of Prudential Real i.e., Prudential Real and Global Multi-strategy go up and down completely randomly.
Pair Corralation between Prudential Real and Global Multi-strategy
Assuming the 90 days horizon Prudential Real Estate is expected to generate 2.54 times more return on investment than Global Multi-strategy. However, Prudential Real is 2.54 times more volatile than Global Multi Strategy Fund. It trades about 0.24 of its potential returns per unit of risk. Global Multi Strategy Fund is currently generating about 0.09 per unit of risk. If you would invest 664.00 in Prudential Real Estate on September 3, 2024 and sell it today you would earn a total of 154.00 from holding Prudential Real Estate or generate 23.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Real Estate vs. Global Multi Strategy Fund
Performance |
| Timeline |
| Prudential Real Estate |
| Global Multi Strategy |
Prudential Real and Global Multi-strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Real and Global Multi-strategy
The main advantage of trading using opposite Prudential Real and Global Multi-strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Real position performs unexpectedly, Global Multi-strategy 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 Global Multi-strategy will offset losses from the drop in Global Multi-strategy's long position.| Prudential Real vs. Multisector Bond Sma | Prudential Real vs. California Bond Fund | Prudential Real vs. Artisan High Income | Prudential Real vs. Dreyfusstandish Global Fixed |
| Global Multi-strategy vs. Columbia Real Estate | Global Multi-strategy vs. Columbia Real Estate | Global Multi-strategy vs. Us Real Estate | Global Multi-strategy vs. Prudential Real Estate |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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