Correlation Between Prudential Real and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Prudential Real and Emerging Markets 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 Real and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Real Estate and Emerging Markets Portfolio, you can compare the effects of market volatilities on Prudential Real and Emerging Markets 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 Real with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Real and Emerging Markets.
Diversification Opportunities for Prudential Real and Emerging Markets
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prudential and Emerging is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Real Estate and Emerging Markets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Por and Prudential Real 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 Real Estate are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Por has no effect on the direction of Prudential Real i.e., Prudential Real and Emerging Markets go up and down completely randomly.
Pair Corralation between Prudential Real and Emerging Markets
Assuming the 90 days horizon Prudential Real is expected to generate 1.87 times less return on investment than Emerging Markets. In addition to that, Prudential Real is 1.18 times more volatile than Emerging Markets Portfolio. It trades about 0.14 of its total potential returns per unit of risk. Emerging Markets Portfolio is currently generating about 0.32 per unit of volatility. If you would invest 1,925 in Emerging Markets Portfolio on April 5, 2025 and sell it today you would earn a total of 457.00 from holding Emerging Markets Portfolio or generate 23.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Real Estate vs. Emerging Markets Portfolio
Performance |
| Timeline |
| Prudential Real Estate |
| Emerging Markets Por |
Prudential Real and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Real and Emerging Markets
The main advantage of trading using opposite Prudential Real and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Real position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Prudential Real vs. Realty Income | Prudential Real vs. Dynex Capital | Prudential Real vs. First Industrial Realty | Prudential Real vs. Healthcare Realty Trust |
| Emerging Markets vs. Fidelity Advisor Financial | Emerging Markets vs. Vanguard Financials Index | Emerging Markets vs. Rmb Mendon Financial | Emerging Markets vs. Transamerica Financial Life |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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