Correlation Between Prudential Muni and Versatile Bond

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

Diversification Opportunities for Prudential Muni and Versatile Bond

0.0

Correlation Coefficient

Prudential Muni  Versatile Bond

Pay attention - limited upside

The 3 months correlation between Prudential and Versatile is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Muni High and Versatile Bond Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Versatile Bond Portfolio 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 Versatile Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Versatile Bond Portfolio has no effect on the direction of Prudential Muni i.e., Prudential Muni and Versatile Bond go up and down completely randomly.

Pair Corralation between Prudential Muni and Versatile Bond

If you would invest  6,507  in Versatile Bond Portfolio on April 30, 2025 and sell it today you would earn a total of  91.00  from holding Versatile Bond Portfolio or generate 1.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Prudential Muni High  vs.  Versatile Bond Portfolio

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 basic indicators, Prudential Muni is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Versatile Bond Portfolio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Versatile Bond Portfolio are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Versatile Bond 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 Muni and Versatile Bond

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

The idea behind Prudential Muni High and Versatile Bond Portfolio 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.