Correlation Between Aig Government and Prudential Government
Can any of the company-specific risk be diversified away by investing in both Aig Government and Prudential 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 Aig Government and Prudential Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aig Government Money and Prudential Government Money, you can compare the effects of market volatilities on Aig Government and Prudential 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 Aig Government with a short position of Prudential Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Prudential Government.
Diversification Opportunities for Aig Government and Prudential Government
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aig and Prudential is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Prudential Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Government and Aig Government 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 Aig Government Money are associated (or correlated) with Prudential Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Government has no effect on the direction of Aig Government i.e., Aig Government and Prudential Government go up and down completely randomly.
Pair Corralation between Aig Government and Prudential Government
Assuming the 90 days horizon Aig Government is expected to generate 1.16 times less return on investment than Prudential Government. In addition to that, Aig Government is 1.28 times more volatile than Prudential Government Money. It trades about 0.07 of its total potential returns per unit of risk. Prudential Government Money is currently generating about 0.11 per unit of volatility. If you would invest 95.00 in Prudential Government Money on September 3, 2024 and sell it today you would earn a total of 5.00 from holding Prudential Government Money or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.73% |
| Values | Daily Returns |
Aig Government Money vs. Prudential Government Money
Performance |
| Timeline |
| Aig Government Money |
| Prudential Government |
Aig Government and Prudential Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aig Government and Prudential Government
The main advantage of trading using opposite Aig Government and Prudential Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government position performs unexpectedly, Prudential 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 Prudential Government will offset losses from the drop in Prudential Government's long position.| Aig Government vs. Nuveen Massachusetts Municipal | Aig Government vs. Nuveen Massachusetts Municipal | Aig Government vs. Mfs Massachusetts Municipal |
| Prudential Government vs. Tfa Alphagen Growth | Prudential Government vs. Mid Cap Growth | Prudential Government vs. Pace Large Growth | Prudential Government vs. T Rowe Price |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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