Correlation Between Cornerstone Strategic and Prudential Short

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

By analyzing existing cross correlation between Cornerstone Strategic Value and Prudential Short Duration, you can compare the effects of market volatilities on Cornerstone Strategic and Prudential Short 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 Cornerstone Strategic with a short position of Prudential Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and Prudential Short.

Diversification Opportunities for Cornerstone Strategic and Prudential Short

-0.58

Correlation Coefficient

Cornerstone Strategic  Prudential Short

Excellent diversification

The 3 months correlation between Cornerstone and Prudential is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Value and Prudential Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Short Duration and Cornerstone Strategic 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 Cornerstone Strategic Value are associated (or correlated) with Prudential Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Short Duration has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and Prudential Short go up and down completely randomly.

Pair Corralation between Cornerstone Strategic and Prudential Short

Considering the 90-day investment horizon Cornerstone Strategic Value is expected to generate 5.67 times more return on investment than Prudential Short. However, Cornerstone Strategic is 5.67 times more volatile than Prudential Short Duration. It trades about 0.2 of its potential returns per unit of risk. Prudential Short Duration is currently generating about -0.09 per unit of risk. If you would invest  734.00  in Cornerstone Strategic Value on September 16, 2024 and sell it today you would earn a total of  135.00  from holding Cornerstone Strategic Value or generate 18.39% return on investment over 90 days.

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

Cornerstone Strategic Value  vs.  Prudential Short Duration

Cornerstone Strategic

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cornerstone Strategic Value are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unsteady essential indicators, Cornerstone Strategic displayed solid returns over the last few months and may actually be approaching a breakup point.

Prudential Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cornerstone Strategic and Prudential Short

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

The idea behind Cornerstone Strategic Value and Prudential Short Duration 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.