Correlation Between Prudential California and Catalyst/warrington

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

By analyzing existing cross correlation between Prudential California Muni and Catalystwarrington Strategic Program, you can compare the effects of market volatilities on Prudential California and Catalyst/warrington 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 California with a short position of Catalyst/warrington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential California and Catalyst/warrington.

Diversification Opportunities for Prudential California and Catalyst/warrington

-0.42

Correlation Coefficient

Prudential California  Catalyst/warrington

Very good diversification

The 3 months correlation between Prudential and Catalyst/warrington is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Prudential California Muni and Catalystwarrington Strategic P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst/warrington and Prudential California 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 California Muni are associated (or correlated) with Catalyst/warrington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst/warrington has no effect on the direction of Prudential California i.e., Prudential California and Catalyst/warrington go up and down completely randomly.

Pair Corralation between Prudential California and Catalyst/warrington

Assuming the 90 days horizon Prudential California Muni is expected to generate 0.37 times more return on investment than Catalyst/warrington. However, Prudential California Muni is 2.69 times less risky than Catalyst/warrington. It trades about 0.38 of its potential returns per unit of risk. Catalystwarrington Strategic Program is currently generating about -0.04 per unit of risk. If you would invest  976.00  in Prudential California Muni on September 1, 2025 and sell it today you would earn a total of  25.00  from holding Prudential California Muni or generate 2.56% return on investment over 90 days.

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

Prudential California Muni  vs.  Catalystwarrington Strategic P

Prudential California

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential California Muni are ranked lower than 30 (%) 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.

Catalyst/warrington

Risk-Adjusted Performance

Weakest

Over the last 90 days Catalystwarrington Strategic Program has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Catalyst/warrington is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prudential California and Catalyst/warrington

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

The idea behind Prudential California Muni and Catalystwarrington Strategic Program 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.