Correlation Between Extended Market and Prudential Government
Can any of the company-specific risk be diversified away by investing in both Extended Market 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 Extended Market and Prudential Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extended Market Index and Prudential Government Money, you can compare the effects of market volatilities on Extended Market 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 Extended Market with a short position of Prudential Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extended Market and Prudential Government.
Diversification Opportunities for Extended Market and Prudential Government
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Extended and Prudential is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Extended Market Index and Prudential Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Government and Extended Market 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 Extended Market Index 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 Extended Market i.e., Extended Market and Prudential Government go up and down completely randomly.
Pair Corralation between Extended Market and Prudential Government
If you would invest 2,062 in Extended Market Index on October 24, 2024 and sell it today you would earn a total of 44.00 from holding Extended Market Index or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extended Market Index vs. Prudential Government Money
Performance |
| Timeline |
| Extended Market Index |
| Prudential Government |
Extended Market and Prudential Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extended Market and Prudential Government
The main advantage of trading using opposite Extended Market and Prudential Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extended Market 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.| Extended Market vs. Qs Large Cap | Extended Market vs. Americafirst Large Cap | Extended Market vs. Vest Large Cap | Extended Market vs. Touchstone Large Cap |
| Prudential Government vs. Virtus Convertible | Prudential Government vs. Fidelity Sai Convertible | Prudential Government vs. Gabelli Convertible And | Prudential Government vs. Lord Abbett Convertible |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |