Correlation Between Ishares Municipal and Prudential Global
Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Prudential Global 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 Ishares Municipal and Prudential Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ishares Municipal Bond and Prudential Global Total, you can compare the effects of market volatilities on Ishares Municipal and Prudential Global 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 Ishares Municipal with a short position of Prudential Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Prudential Global.
Diversification Opportunities for Ishares Municipal and Prudential Global
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ishares and Prudential is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Prudential Global Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Global Total and Ishares Municipal 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 Ishares Municipal Bond are associated (or correlated) with Prudential Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Global Total has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Prudential Global go up and down completely randomly.
Pair Corralation between Ishares Municipal and Prudential Global
Assuming the 90 days horizon Ishares Municipal is expected to generate 2.16 times less return on investment than Prudential Global. But when comparing it to its historical volatility, Ishares Municipal Bond is 1.28 times less risky than Prudential Global. It trades about 0.12 of its potential returns per unit of risk. Prudential Global Total is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 853.00 in Prudential Global Total on May 27, 2025 and sell it today you would earn a total of 21.00 from holding Prudential Global Total or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ishares Municipal Bond vs. Prudential Global Total
Performance |
| Timeline |
| Ishares Municipal Bond |
| Prudential Global Total |
Ishares Municipal and Prudential Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Municipal and Prudential Global
The main advantage of trading using opposite Ishares Municipal and Prudential Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Prudential Global 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 Global will offset losses from the drop in Prudential Global's long position.| Ishares Municipal vs. Smallcap World Fund | Ishares Municipal vs. Franklin Equity Income | Ishares Municipal vs. Gmo Global Equity | Ishares Municipal vs. Touchstone International Equity |
| Prudential Global vs. Blackrock Government Bond | Prudential Global vs. Intermediate Government Bond | Prudential Global vs. Jpmorgan Government Bond | Prudential Global vs. Dunham Porategovernment Bond |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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