Correlation Between Prudential Short and Deutsche Multi-asset

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Can any of the company-specific risk be diversified away by investing in both Prudential Short and Deutsche Multi-asset 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 Short and Deutsche Multi-asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Short Duration and Deutsche Multi Asset Moderate, you can compare the effects of market volatilities on Prudential Short and Deutsche Multi-asset 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 Short with a short position of Deutsche Multi-asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Short and Deutsche Multi-asset.

Diversification Opportunities for Prudential Short and Deutsche Multi-asset

PrudentialDeutscheDiversified AwayPrudentialDeutscheDiversified Away100%
0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Prudential and Deutsche is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Short Duration and Deutsche Multi Asset Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Multi Asset and Prudential Short 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 Short Duration are associated (or correlated) with Deutsche Multi-asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Multi Asset has no effect on the direction of Prudential Short i.e., Prudential Short and Deutsche Multi-asset go up and down completely randomly.

Pair Corralation between Prudential Short and Deutsche Multi-asset

Assuming the 90 days horizon Prudential Short Duration is expected to generate 0.04 times more return on investment than Deutsche Multi-asset. However, Prudential Short Duration is 26.62 times less risky than Deutsche Multi-asset. It trades about -0.04 of its potential returns per unit of risk. Deutsche Multi Asset Moderate is currently generating about -0.14 per unit of risk. If you would invest  839.00  in Prudential Short Duration on October 16, 2024 and sell it today you would lose (3.00) from holding Prudential Short Duration or give up 0.36% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.36%
ValuesDaily Returns

Prudential Short Duration  vs.  Deutsche Multi Asset Moderate

 Performance 
JavaScript chart by amCharts 3.21.15NovDec -30-25-20-15-10-50
JavaScript chart by amCharts 3.21.15HYSZX PPLSX
       Timeline  
Prudential Short Duration 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 basic indicators, Prudential Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan8.38.328.348.368.388.48.42
Deutsche Multi Asset 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Deutsche Multi Asset Moderate has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan77.588.599.510

Prudential Short and Deutsche Multi-asset Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.37-0.18-0.0793-0.0434-0.0075550.02830.06420.10.290.48 5101520
JavaScript chart by amCharts 3.21.15HYSZX PPLSX
       Returns  

Pair Trading with Prudential Short and Deutsche Multi-asset

The main advantage of trading using opposite Prudential Short and Deutsche Multi-asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Short position performs unexpectedly, Deutsche Multi-asset 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 Deutsche Multi-asset will offset losses from the drop in Deutsche Multi-asset's long position.
The idea behind Prudential Short Duration and Deutsche Multi Asset Moderate 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.

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