Correlation Between Prudential Muni and Prudential Balanced

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

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

Diversification Opportunities for Prudential Muni and Prudential Balanced

-0.01

Correlation Coefficient

Prudential Muni  Prudential Balanced

Good diversification

The 3 months correlation between Prudential and Prudential is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Muni High and Prudential Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Balanced and Prudential Muni 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 Muni High are associated (or correlated) with Prudential Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Balanced has no effect on the direction of Prudential Muni i.e., Prudential Muni and Prudential Balanced go up and down completely randomly.

Pair Corralation between Prudential Muni and Prudential Balanced

Assuming the 90 days horizon Prudential Muni High is expected to under-perform the Prudential Balanced. But the mutual fund apears to be less risky and, when comparing its historical volatility, Prudential Muni High is 2.6 times less risky than Prudential Balanced. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Prudential Balanced Fund is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,691  in Prudential Balanced Fund on April 30, 2025 and sell it today you would earn a total of  155.00  from holding Prudential Balanced Fund or generate 9.17% return on investment over 90 days.

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

Prudential Muni High  vs.  Prudential Balanced Fund

Prudential Muni High

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential Muni High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Prudential Muni is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prudential Balanced

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Balanced Fund are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Prudential Balanced may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Prudential Muni and Prudential Balanced

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

The idea behind Prudential Muni High and Prudential Balanced Fund 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.