Correlation Between FMC and PGIM Large

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

By analyzing existing cross correlation between FMC Corporation and PGIM Large Cap Buffer, you can compare the effects of market volatilities on FMC and PGIM Large 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 FMC with a short position of PGIM Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of FMC and PGIM Large.

Diversification Opportunities for FMC and PGIM Large

-0.74

Correlation Coefficient

FMC  PGIM Large

Pay attention - limited upside

The 3 months correlation between FMC and PGIM is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp. and PGIM Large Cap Buffer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Large Cap and FMC 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 FMC Corporation are associated (or correlated) with PGIM Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Large Cap has no effect on the direction of FMC i.e., FMC and PGIM Large go up and down completely randomly.

Pair Corralation between FMC and PGIM Large

Considering the 90-day investment horizon FMC Corporation is expected to under-perform the PGIM Large. In addition to that, FMC is 7.06 times more volatile than PGIM Large Cap Buffer. It trades about -0.39 of its total potential returns per unit of risk. PGIM Large Cap Buffer is currently generating about -0.09 per unit of volatility. If you would invest  2,800  in PGIM Large Cap Buffer on October 5, 2024 and sell it today you would lose (15.60) from holding PGIM Large Cap Buffer or give up 0.56% of portfolio value over 90 days.

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

FMC Corp.  vs.  PGIM Large Cap Buffer

FMC Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FMC Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

PGIM Large Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Large Cap Buffer are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, PGIM Large is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with FMC and PGIM Large

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

The idea behind FMC Corporation and PGIM Large Cap Buffer 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.