Correlation Between Prudential Short and High Yield
Can any of the company-specific risk be diversified away by investing in both Prudential Short and High Yield 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 Prudential Short and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Short Duration and High Yield Fund, you can compare the effects of market volatilities on Prudential Short and High Yield 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 Prudential Short with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Short and High Yield.
Diversification Opportunities for Prudential Short and High Yield
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Prudential and High is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Short Duration and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund and Prudential Short 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 Prudential Short Duration are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Prudential Short i.e., Prudential Short and High Yield go up and down completely randomly.
Pair Corralation between Prudential Short and High Yield
Assuming the 90 days horizon Prudential Short is expected to generate 1.01 times less return on investment than High Yield. But when comparing it to its historical volatility, Prudential Short Duration is 1.33 times less risky than High Yield. It trades about 0.33 of its potential returns per unit of risk. High Yield Fund is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 785.00 in High Yield Fund on April 30, 2025 and sell it today you would earn a total of 24.00 from holding High Yield Fund or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Short Duration vs. High Yield Fund
Performance |
| Timeline |
| Prudential Short Duration |
| High Yield Fund |
Prudential Short and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Short and High Yield
The main advantage of trading using opposite Prudential Short and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Short position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Prudential Short vs. Balanced Fund Retail | Prudential Short vs. Dws Equity Sector | Prudential Short vs. Ab Equity Income | Prudential Short vs. Ab Select Equity |
| High Yield vs. Leader Short Term Bond | High Yield vs. Nuveen Short Term | High Yield vs. Lord Abbett Short | High Yield vs. Prudential Short Duration |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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