Correlation Between Prudential Real and Strengthening Dollar
Can any of the company-specific risk be diversified away by investing in both Prudential Real and Strengthening Dollar 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 Strengthening Dollar 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 Strengthening Dollar 2x, you can compare the effects of market volatilities on Prudential Real and Strengthening Dollar 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 Strengthening Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Real and Strengthening Dollar.
Diversification Opportunities for Prudential Real and Strengthening Dollar
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Prudential and Strengthening is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Real Estate and Strengthening Dollar 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strengthening Dollar 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 Strengthening Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strengthening Dollar has no effect on the direction of Prudential Real i.e., Prudential Real and Strengthening Dollar go up and down completely randomly.
Pair Corralation between Prudential Real and Strengthening Dollar
Assuming the 90 days horizon Prudential Real is expected to generate 3.65 times less return on investment than Strengthening Dollar. But when comparing it to its historical volatility, Prudential Real Estate is 1.58 times less risky than Strengthening Dollar. It trades about 0.09 of its potential returns per unit of risk. Strengthening Dollar 2x is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,486 in Strengthening Dollar 2x on September 5, 2024 and sell it today you would earn a total of 270.00 from holding Strengthening Dollar 2x or generate 4.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Prudential Real Estate vs. Strengthening Dollar 2x
Performance |
| Timeline |
| Prudential Real Estate |
| Strengthening Dollar |
Prudential Real and Strengthening Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Real and Strengthening Dollar
The main advantage of trading using opposite Prudential Real and Strengthening Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Real position performs unexpectedly, Strengthening Dollar 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 Strengthening Dollar will offset losses from the drop in Strengthening Dollar's long position.| Prudential Real vs. Touchstone Large Cap | Prudential Real vs. Rational Strategic Allocation | Prudential Real vs. Fm Investments Large | Prudential Real vs. Qs Global Equity |
| Strengthening Dollar vs. Basic Materials Fund | Strengthening Dollar vs. Basic Materials Fund | Strengthening Dollar vs. Banking Fund Class | Strengthening Dollar vs. Basic Materials Fund |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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