Correlation Between Prudential California and Short Precious

Can any of the company-specific risk be diversified away by investing in both Prudential California and Short Precious 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 Short Precious 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 Short Precious Metals, you can compare the effects of market volatilities on Prudential California and Short Precious 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 Short Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential California and Short Precious.

Diversification Opportunities for Prudential California and Short Precious

-0.76

Correlation Coefficient

Prudential California  Short Precious

Pay attention - limited upside

The 3 months correlation between Prudential and Short is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Prudential California Muni and Short Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Precious Metals 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 Short Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Precious Metals has no effect on the direction of Prudential California i.e., Prudential California and Short Precious go up and down completely randomly.

Pair Corralation between Prudential California and Short Precious

Assuming the 90 days horizon Prudential California Muni is expected to generate 0.05 times more return on investment than Short Precious. However, Prudential California Muni is 21.76 times less risky than Short Precious. It trades about 0.19 of its potential returns per unit of risk. Short Precious Metals is currently generating about -0.05 per unit of risk. If you would invest  965.00  in Prudential California Muni on May 7, 2025 and sell it today you would earn a total of  11.00  from holding Prudential California Muni or generate 1.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Prudential California Muni  vs.  Short Precious Metals

Prudential California

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential California Muni are ranked lower than 14 (%) 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.

Short Precious Metals

Risk-Adjusted Performance

Weakest

Over the last 90 days Short Precious Metals has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Prudential California and Short Precious

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

The idea behind Prudential California Muni and Short Precious Metals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.