Correlation Between Madison Core and Prudential California

Can any of the company-specific risk be diversified away by investing in both Madison Core and Prudential California 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 Madison Core and Prudential California into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Madison E Bond and Prudential California Muni, you can compare the effects of market volatilities on Madison Core and Prudential California 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 Madison Core with a short position of Prudential California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Core and Prudential California.

Diversification Opportunities for Madison Core and Prudential California

0.95

Correlation Coefficient

Madison Core  Prudential California

Almost no diversification

The 3 months correlation between Madison and Prudential is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Madison E Bond and Prudential California Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential California and Madison Core 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 Madison E Bond are associated (or correlated) with Prudential California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential California has no effect on the direction of Madison Core i.e., Madison Core and Prudential California go up and down completely randomly.

Pair Corralation between Madison Core and Prudential California

Assuming the 90 days horizon Madison E Bond is expected to generate 2.05 times more return on investment than Prudential California. However, Madison Core is 2.05 times more volatile than Prudential California Muni. It trades about 0.25 of its potential returns per unit of risk. Prudential California Muni is currently generating about 0.41 per unit of risk. If you would invest  894.00  in Madison E Bond on July 16, 2025 and sell it today you would earn a total of  32.00  from holding Madison E Bond or generate 3.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Madison E Bond  vs.  Prudential California Muni

Madison E Bond

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Madison E Bond are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Madison Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prudential California

Risk-Adjusted Performance

High

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential California Muni are ranked lower than 32 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Madison Core and Prudential California

The main advantage of trading using opposite Madison Core and Prudential California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Core position performs unexpectedly, Prudential California 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 Prudential California will offset losses from the drop in Prudential California's long position.

The idea behind Madison E Bond and Prudential California Muni 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 CEOs Directory module to screen CEOs from public companies around the world.