Correlation Between Nasdaq 100 and Prudential Floating
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Prudential Floating 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 Nasdaq 100 and Prudential Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Index Fund and Prudential Floating Rate, you can compare the effects of market volatilities on Nasdaq 100 and Prudential Floating 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 Nasdaq 100 with a short position of Prudential Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Prudential Floating.
Diversification Opportunities for Nasdaq 100 and Prudential Floating
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nasdaq and Prudential is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Prudential Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Floating Rate and Nasdaq 100 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 Nasdaq 100 Index Fund are associated (or correlated) with Prudential Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Floating Rate has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Prudential Floating go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Prudential Floating
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 21.86 times more return on investment than Prudential Floating. However, Nasdaq 100 is 21.86 times more volatile than Prudential Floating Rate. It trades about 0.18 of its potential returns per unit of risk. Prudential Floating Rate is currently generating about 0.12 per unit of risk. If you would invest 5,295 in Nasdaq 100 Index Fund on September 13, 2024 and sell it today you would earn a total of 179.00 from holding Nasdaq 100 Index Fund or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Prudential Floating Rate
Performance |
| Timeline |
| Nasdaq 100 Index |
| Prudential Floating Rate |
Nasdaq 100 and Prudential Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Prudential Floating
The main advantage of trading using opposite Nasdaq 100 and Prudential Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Prudential Floating 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 Floating will offset losses from the drop in Prudential Floating's long position.| Nasdaq 100 vs. Capital Growth Fund | Nasdaq 100 vs. Emerging Markets Fund | Nasdaq 100 vs. High Income Fund | Nasdaq 100 vs. International Fund International |
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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