Correlation Between Prudential Government and Ab International
Can any of the company-specific risk be diversified away by investing in both Prudential Government and Ab International 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 Government and Ab International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Government Money and Ab International Growth, you can compare the effects of market volatilities on Prudential Government and Ab International 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 Government with a short position of Ab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Government and Ab International.
Diversification Opportunities for Prudential Government and Ab International
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prudential and AWPIX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Government Money and Ab International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab International Growth and Prudential Government 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 Government Money are associated (or correlated) with Ab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab International Growth has no effect on the direction of Prudential Government i.e., Prudential Government and Ab International go up and down completely randomly.
Pair Corralation between Prudential Government and Ab International
If you would invest 2,078 in Ab International Growth on April 6, 2025 and sell it today you would earn a total of 136.00 from holding Ab International Growth or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Government Money vs. Ab International Growth
Performance |
| Timeline |
| Prudential Government |
| Ab International Growth |
Prudential Government and Ab International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Government and Ab International
The main advantage of trading using opposite Prudential Government and Ab International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Government position performs unexpectedly, Ab International 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 Ab International will offset losses from the drop in Ab International's long position.The idea behind Prudential Government Money and Ab International Growth 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.
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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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