Correlation Between Prudential Select and Madison Diversified

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

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

Diversification Opportunities for Prudential Select and Madison Diversified

0.0

Correlation Coefficient

Prudential Select  Madison Diversified

Pay attention - limited upside

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

Pair Corralation between Prudential Select and Madison Diversified

If you would invest  1,262  in Madison Diversified Income on May 20, 2025 and sell it today you would earn a total of  34.00  from holding Madison Diversified Income or generate 2.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

Prudential Select Real  vs.  Madison Diversified Income

Prudential Select Real

Risk-Adjusted Performance

Soft

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

Madison Diversified

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Madison Diversified Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Madison Diversified 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 Select and Madison Diversified

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

The idea behind Prudential Select Real and Madison Diversified Income 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.