Correlation Between Pro Blend and Prudential Commodity

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

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

Diversification Opportunities for Pro Blend and Prudential Commodity

0.73

Correlation Coefficient

Pro Blend  Prudential Commodity

Poor diversification

The 3 months correlation between Pro and Prudential is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pro Blend Moderate Term and Prudential Commodity Strategie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Commodity and Pro Blend 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 Pro Blend Moderate Term 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 Pro Blend i.e., Pro Blend and Prudential Commodity go up and down completely randomly.

Pair Corralation between Pro Blend and Prudential Commodity

Assuming the 90 days horizon Pro Blend Moderate Term is expected to under-perform the Prudential Commodity. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pro Blend Moderate Term is 1.33 times less risky than Prudential Commodity. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Prudential Commodity Strategies is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  693.00  in Prudential Commodity Strategies on September 30, 2024 and sell it today you would lose (37.00) from holding Prudential Commodity Strategies or give up 5.34% of portfolio value over 90 days.

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

Pro Blend Moderate Term  vs.  Prudential Commodity Strategie

Pro Blend Moderate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pro Blend Moderate Term has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Prudential Commodity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Commodity Strategies has generated negative risk-adjusted returns adding no value to fund investors. 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 Pro Blend and Prudential Commodity

The main advantage of trading using opposite Pro Blend and Prudential Commodity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pro Blend 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 Pro Blend Moderate Term 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.