Correlation Between Prudential Porate and Prudential Balanced

Can any of the company-specific risk be diversified away by investing in both Prudential Porate 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 Porate 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 Porate Bond and Prudential Balanced Fund, you can compare the effects of market volatilities on Prudential Porate 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 Porate with a short position of Prudential Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Porate and Prudential Balanced.

Diversification Opportunities for Prudential Porate and Prudential Balanced

0.56

Correlation Coefficient

Prudential Porate  Prudential Balanced

Very weak diversification

The 3 months correlation between Prudential and Prudential is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Porate Bond 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 Porate 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 Porate Bond 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 Porate i.e., Prudential Porate and Prudential Balanced go up and down completely randomly.

Pair Corralation between Prudential Porate and Prudential Balanced

Assuming the 90 days horizon Prudential Porate is expected to generate 10.64 times less return on investment than Prudential Balanced. But when comparing it to its historical volatility, Prudential Porate Bond is 1.56 times less risky than Prudential Balanced. It trades about 0.05 of its potential returns per unit of risk. Prudential Balanced Fund is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,690  in Prudential Balanced Fund on April 29, 2025 and sell it today you would earn a total of  156.00  from holding Prudential Balanced Fund or generate 9.23% return on investment over 90 days.

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

Prudential Porate Bond  vs.  Prudential Balanced Fund

Prudential Porate Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Porate Bond are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Prudential Porate 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 Porate and Prudential Balanced

The main advantage of trading using opposite Prudential Porate and Prudential Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Porate 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 Porate Bond 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.