Correlation Between Prudential Health and Americafirst Income

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

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

Diversification Opportunities for Prudential Health and Americafirst Income

-0.48

Correlation Coefficient

Prudential Health  Americafirst Income

Very good diversification

The 3 months correlation between Prudential and Americafirst is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Health Sciences and Americafirst Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Income and Prudential Health 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 Health Sciences are associated (or correlated) with Americafirst Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Income has no effect on the direction of Prudential Health i.e., Prudential Health and Americafirst Income go up and down completely randomly.

Pair Corralation between Prudential Health and Americafirst Income

Assuming the 90 days horizon Prudential Health Sciences is expected to under-perform the Americafirst Income. In addition to that, Prudential Health is 1.35 times more volatile than Americafirst Income Fund. It trades about -0.08 of its total potential returns per unit of risk. Americafirst Income Fund is currently generating about 0.09 per unit of volatility. If you would invest  446.00  in Americafirst Income Fund on September 12, 2024 and sell it today you would earn a total of  16.00  from holding Americafirst Income Fund or generate 3.59% return on investment over 90 days.

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

Prudential Health Sciences  vs.  Americafirst Income Fund

Prudential Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Americafirst Income

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Americafirst Income Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Americafirst Income 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 Health and Americafirst Income

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

The idea behind Prudential Health Sciences and Americafirst Income 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.