Correlation Between New York and Prudential Government
Can any of the company-specific risk be diversified away by investing in both New York 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 New York and Prudential Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New York Tax Free and Prudential Government Income, you can compare the effects of market volatilities on New York 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 New York with a short position of Prudential Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and Prudential Government.
Diversification Opportunities for New York and Prudential Government
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Prudential is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding New York Tax Free and Prudential Government Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Government and New York 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 New York Tax Free 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 New York i.e., New York and Prudential Government go up and down completely randomly.
Pair Corralation between New York and Prudential Government
Assuming the 90 days horizon New York Tax Free is expected to generate 0.64 times more return on investment than Prudential Government. However, New York Tax Free is 1.57 times less risky than Prudential Government. It trades about 0.08 of its potential returns per unit of risk. Prudential Government Income is currently generating about 0.03 per unit of risk. If you would invest 983.00 in New York Tax Free on September 13, 2024 and sell it today you would earn a total of 116.00 from holding New York Tax Free or generate 11.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
New York Tax Free vs. Prudential Government Income
Performance |
| Timeline |
| New York Tax |
| Prudential Government |
New York and Prudential Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New York and Prudential Government
The main advantage of trading using opposite New York and Prudential Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York 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.| New York vs. Prudential Government Income | New York vs. Davis Government Bond | New York vs. Dws Government Money | New York vs. Wesmark Government Bond |
| Prudential Government vs. Washington Mutual Investors | Prudential Government vs. Aqr Large Cap | Prudential Government vs. T Rowe Price | Prudential Government vs. Qs 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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