Correlation Between Prudential California and Valic Company

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Can any of the company-specific risk be diversified away by investing in both Prudential California and Valic Company 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 California and Valic Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential California Muni and Valic Company I, you can compare the effects of market volatilities on Prudential California and Valic Company 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 California with a short position of Valic Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential California and Valic Company.

Diversification Opportunities for Prudential California and Valic Company

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Prudential and Valic is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Prudential California Muni and Valic Company I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valic Company I and Prudential California 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 California Muni are associated (or correlated) with Valic Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valic Company I has no effect on the direction of Prudential California i.e., Prudential California and Valic Company go up and down completely randomly.

Pair Corralation between Prudential California and Valic Company

Assuming the 90 days horizon Prudential California is expected to generate 1849.0 times less return on investment than Valic Company. But when comparing it to its historical volatility, Prudential California Muni is 8.94 times less risky than Valic Company. It trades about 0.0 of its potential returns per unit of risk. Valic Company I is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,148  in Valic Company I on April 27, 2025 and sell it today you would earn a total of  44.00  from holding Valic Company I or generate 3.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Prudential California Muni  vs.  Valic Company I

 Performance 
       Timeline  
Prudential California 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Prudential California Muni are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Valic Company I 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Valic Company I are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Valic Company may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Prudential California and Valic Company Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Prudential California and Valic Company

The main advantage of trading using opposite Prudential California and Valic Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential California position performs unexpectedly, Valic Company 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 Valic Company will offset losses from the drop in Valic Company's long position.
The idea behind Prudential California Muni and Valic Company I pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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