Correlation Between Western Asset and Prudential Floating
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Prudential Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Inflation and Prudential Floating Rate, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Prudential Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Prudential Floating.
Diversification Opportunities for Western Asset and Prudential Floating
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Prudential is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation 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 Western Asset 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 Western Asset Inflation 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 Western Asset i.e., Western Asset and Prudential Floating go up and down completely randomly.
Pair Corralation between Western Asset and Prudential Floating
Assuming the 90 days horizon Western Asset is expected to generate 2.0 times less return on investment than Prudential Floating. In addition to that, Western Asset is 1.89 times more volatile than Prudential Floating Rate. It trades about 0.06 of its total potential returns per unit of risk. Prudential Floating Rate is currently generating about 0.21 per unit of volatility. If you would invest 831.00 in Prudential Floating Rate on September 3, 2024 and sell it today you would earn a total of 84.00 from holding Prudential Floating Rate or generate 10.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Inflation vs. Prudential Floating Rate
Performance |
| Timeline |
| Western Asset Inflation |
| Prudential Floating Rate |
Western Asset and Prudential Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Prudential Floating
The main advantage of trading using opposite Western Asset and Prudential Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Blackrock Sm Cap | Western Asset vs. Principal Lifetime Hybrid | Western Asset vs. Adams Diversified Equity | Western Asset vs. Lord Abbett Diversified |
| Prudential Floating vs. Oklahoma College Savings | Prudential Floating vs. Ab Bond Inflation | Prudential Floating vs. Western Asset Inflation | Prudential Floating vs. Ab Bond Inflation |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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