Correlation Between Prudential Total and Total Return
Can any of the company-specific risk be diversified away by investing in both Prudential Total and Total Return 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 Total and Total Return into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Total Return and Total Return Fund, you can compare the effects of market volatilities on Prudential Total and Total Return 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 Total with a short position of Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Total and Total Return.
Diversification Opportunities for Prudential Total and Total Return
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Prudential and Total is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Total Return and Total Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return and Prudential Total 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 Total Return are associated (or correlated) with Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return has no effect on the direction of Prudential Total i.e., Prudential Total and Total Return go up and down completely randomly.
Pair Corralation between Prudential Total and Total Return
Assuming the 90 days horizon Prudential Total is expected to generate 1.19 times less return on investment than Total Return. But when comparing it to its historical volatility, Prudential Total Return is 1.04 times less risky than Total Return. It trades about 0.08 of its potential returns per unit of risk. Total Return Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 855.00 in Total Return Fund on August 29, 2024 and sell it today you would earn a total of 6.00 from holding Total Return Fund or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Total Return vs. Total Return Fund
Performance |
| Timeline |
| Prudential Total Return |
| Total Return |
Prudential Total and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Total and Total Return
The main advantage of trading using opposite Prudential Total and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Total position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.| Prudential Total vs. John Hancock Bond | Prudential Total vs. Mfs International Diversification | Prudential Total vs. Mfs Growth Fund | Prudential Total vs. Aquagold International |
| Total Return vs. Vanguard Institutional Index | Total Return vs. Dodge Stock Fund | Total Return vs. Europacific Growth Fund | Total Return vs. Real Return 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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