Correlation Between Cmg Ultra and Prudential Commodity

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

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

Diversification Opportunities for Cmg Ultra and Prudential Commodity

0.5

Correlation Coefficient

Cmg Ultra  Prudential Commodity

Very weak diversification

The 3 months correlation between Cmg and Prudential is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cmg Ultra Short and Prudential Commodity Strategie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Commodity and Cmg Ultra 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 Cmg Ultra Short are associated (or correlated) with Prudential Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Commodity has no effect on the direction of Cmg Ultra i.e., Cmg Ultra and Prudential Commodity go up and down completely randomly.

Pair Corralation between Cmg Ultra and Prudential Commodity

Assuming the 90 days horizon Cmg Ultra is expected to generate 12.5 times less return on investment than Prudential Commodity. But when comparing it to its historical volatility, Cmg Ultra Short is 8.59 times less risky than Prudential Commodity. It trades about 0.24 of its potential returns per unit of risk. Prudential Commodity Strategies is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  654.00  in Prudential Commodity Strategies on October 26, 2024 and sell it today you would earn a total of  38.00  from holding Prudential Commodity Strategies or generate 5.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Cmg Ultra Short  vs.  Prudential Commodity Strategie

Cmg Ultra Short

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cmg Ultra Short are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cmg Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prudential Commodity

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Commodity Strategies are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Prudential Commodity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cmg Ultra and Prudential Commodity

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

The idea behind Cmg Ultra Short and Prudential Commodity Strategies 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.