Correlation Between Prudential California and Valic Company
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 Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential California Muni vs. Valic Company I
Performance |
| Timeline |
| Prudential California |
| Valic Company I |
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.| Prudential California vs. Buffalo High Yield | Prudential California vs. Shenkman Short Duration | Prudential California vs. Janus High Yield Fund | Prudential California vs. Pace High Yield |
| Valic Company vs. Putnam Diversified Income | Valic Company vs. Pgim Jennison Diversified | Valic Company vs. Invesco Diversified Dividend | Valic Company vs. Madison Diversified Income |
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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