Correlation Between Virginia Bond and Prudential Government
Can any of the company-specific risk be diversified away by investing in both Virginia Bond 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 Virginia Bond and Prudential Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virginia Bond Fund and Prudential Government Income, you can compare the effects of market volatilities on Virginia Bond 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 Virginia Bond with a short position of Prudential Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia Bond and Prudential Government.
Diversification Opportunities for Virginia Bond and Prudential Government
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Virginia and Prudential is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Virginia Bond Fund and Prudential Government Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Government and Virginia Bond 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 Virginia Bond Fund 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 Virginia Bond i.e., Virginia Bond and Prudential Government go up and down completely randomly.
Pair Corralation between Virginia Bond and Prudential Government
Assuming the 90 days horizon Virginia Bond is expected to generate 1.8 times less return on investment than Prudential Government. But when comparing it to its historical volatility, Virginia Bond Fund is 1.29 times less risky than Prudential Government. It trades about 0.13 of its potential returns per unit of risk. Prudential Government Income is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 779.00 in Prudential Government Income on September 14, 2024 and sell it today you would earn a total of 8.00 from holding Prudential Government Income or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virginia Bond Fund vs. Prudential Government Income
Performance |
| Timeline |
| Virginia Bond |
| Prudential Government |
Virginia Bond and Prudential Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia Bond and Prudential Government
The main advantage of trading using opposite Virginia Bond and Prudential Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia Bond 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.| Virginia Bond vs. Putnam Money Market | Virginia Bond vs. Blackrock Exchange Portfolio | Virginia Bond vs. The Gabelli Money | Virginia Bond vs. Chestnut Street Exchange |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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