Correlation Between Prudential Short and Lifex Inflation

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

Diversification Opportunities for Prudential Short and Lifex Inflation

PrudentialLifexDiversified AwayPrudentialLifexDiversified Away100%
0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Prudential and Lifex is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Short Duration and Lifex Inflation Protected Inco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Inflation Prot and Prudential Short 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 Short Duration are associated (or correlated) with Lifex Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Inflation Prot has no effect on the direction of Prudential Short i.e., Prudential Short and Lifex Inflation go up and down completely randomly.

Pair Corralation between Prudential Short and Lifex Inflation

If you would invest  842.00  in Prudential Short Duration on September 16, 2024 and sell it today you would earn a total of  2.00  from holding Prudential Short Duration or generate 0.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy80.0%
ValuesDaily Returns

Prudential Short Duration  vs.  Lifex Inflation Protected Inco

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -0.50.00.51.0
JavaScript chart by amCharts 3.21.15HYSZX LIAIX
       Timeline  
Prudential Short Duration 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Short Duration are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec8.48.418.428.438.448.458.468.478.48
Lifex Inflation Prot 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lifex Inflation Protected Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Lifex Inflation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prudential Short and Lifex Inflation Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.3-0.1-0.0681-0.0349-0.001660.02940.06390.09840.290.49 510152025
JavaScript chart by amCharts 3.21.15HYSZX LIAIX
       Returns  

Pair Trading with Prudential Short and Lifex Inflation

The main advantage of trading using opposite Prudential Short and Lifex Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Short position performs unexpectedly, Lifex Inflation 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 Lifex Inflation will offset losses from the drop in Lifex Inflation's long position.
The idea behind Prudential Short Duration and Lifex Inflation Protected Income 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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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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