Correlation Between Diversified Bond and Prudential Core
Can any of the company-specific risk be diversified away by investing in both Diversified Bond and Prudential Core 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 Diversified Bond and Prudential Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified Bond Fund and Prudential Core Conservative, you can compare the effects of market volatilities on Diversified Bond and Prudential Core 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 Diversified Bond with a short position of Prudential Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Bond and Prudential Core.
Diversification Opportunities for Diversified Bond and Prudential Core
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between DIVERSIFIED and Prudential is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Bond Fund and Prudential Core Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Core Cons and Diversified 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 Diversified Bond Fund are associated (or correlated) with Prudential Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Core Cons has no effect on the direction of Diversified Bond i.e., Diversified Bond and Prudential Core go up and down completely randomly.
Pair Corralation between Diversified Bond and Prudential Core
Assuming the 90 days horizon Diversified Bond is expected to generate 1.07 times less return on investment than Prudential Core. But when comparing it to its historical volatility, Diversified Bond Fund is 1.12 times less risky than Prudential Core. It trades about 0.19 of its potential returns per unit of risk. Prudential Core Conservative is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 857.00 in Prudential Core Conservative on August 31, 2025 and sell it today you would earn a total of 21.00 from holding Prudential Core Conservative or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diversified Bond Fund vs. Prudential Core Conservative
Performance |
| Timeline |
| Diversified Bond |
| Prudential Core Cons |
Diversified Bond and Prudential Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Bond and Prudential Core
The main advantage of trading using opposite Diversified Bond and Prudential Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Bond position performs unexpectedly, Prudential Core 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 Core will offset losses from the drop in Prudential Core's long position.| Diversified Bond vs. Mid Cap Value | Diversified Bond vs. Equity Growth Fund | Diversified Bond vs. Income Growth Fund | Diversified Bond vs. Diversified Bond Fund |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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