Correlation Between Valic Company and Prudential Short
Can any of the company-specific risk be diversified away by investing in both Valic Company and Prudential Short 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 Valic Company and Prudential Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valic Company I and Prudential Short Duration, you can compare the effects of market volatilities on Valic Company and Prudential Short 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 Valic Company with a short position of Prudential Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Prudential Short.
Diversification Opportunities for Valic Company and Prudential Short
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Valic and Prudential is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Prudential Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Short Duration and Valic Company 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 Valic Company I are associated (or correlated) with Prudential Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Short Duration has no effect on the direction of Valic Company i.e., Valic Company and Prudential Short go up and down completely randomly.
Pair Corralation between Valic Company and Prudential Short
Assuming the 90 days horizon Valic Company I is expected to generate 1.16 times more return on investment than Prudential Short. However, Valic Company is 1.16 times more volatile than Prudential Short Duration. It trades about 0.15 of its potential returns per unit of risk. Prudential Short Duration is currently generating about 0.16 per unit of risk. If you would invest 625.00 in Valic Company I on August 31, 2024 and sell it today you would earn a total of 103.00 from holding Valic Company I or generate 16.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valic Company I vs. Prudential Short Duration
Performance |
| Timeline |
| Valic Company I |
| Prudential Short Duration |
Valic Company and Prudential Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and Prudential Short
The main advantage of trading using opposite Valic Company and Prudential Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company position performs unexpectedly, Prudential Short 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 Short will offset losses from the drop in Prudential Short's long position.| Valic Company vs. Vanguard High Yield Corporate | Valic Company vs. Vanguard High Yield Porate | Valic Company vs. Blackrock Hi Yld | Valic Company vs. Blackrock High Yield |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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