Correlation Between Prudential High and New Economy
Can any of the company-specific risk be diversified away by investing in both Prudential High and New Economy 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 High and New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential High Yield and New Economy Fund, you can compare the effects of market volatilities on Prudential High and New Economy 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 High with a short position of New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential High and New Economy.
Diversification Opportunities for Prudential High and New Economy
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prudential and New is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Prudential High Yield and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund and Prudential High 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 High Yield are associated (or correlated) with New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Prudential High i.e., Prudential High and New Economy go up and down completely randomly.
Pair Corralation between Prudential High and New Economy
Assuming the 90 days horizon Prudential High is expected to generate 13.1 times less return on investment than New Economy. But when comparing it to its historical volatility, Prudential High Yield is 5.4 times less risky than New Economy. It trades about 0.05 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 7,145 in New Economy Fund on August 28, 2025 and sell it today you would earn a total of 587.00 from holding New Economy Fund or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential High Yield vs. New Economy Fund
Performance |
| Timeline |
| Prudential High Yield |
| New Economy Fund |
Prudential High and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential High and New Economy
The main advantage of trading using opposite Prudential High and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential High position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.| Prudential High vs. Science Technology Fund | Prudential High vs. Red Oak Technology | Prudential High vs. Goldman Sachs Technology | Prudential High vs. Fidelity Advisor Technology |
| New Economy vs. First Eagle Gold | New Economy vs. Franklin Gold Precious | New Economy vs. Invesco Gold Special | New Economy vs. Deutsche Gold Precious |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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