Correlation Between ClearShares Ultra and PGIM Active

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

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

Diversification Opportunities for ClearShares Ultra and PGIM Active

0.78

Correlation Coefficient

ClearShares Ultra  PGIM Active

Poor diversification

The 3 months correlation between ClearShares and PGIM is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ClearShares Ultra Short Maturi and PGIM Active High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Active High and ClearShares 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 ClearShares Ultra Short Maturity are associated (or correlated) with PGIM Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Active High has no effect on the direction of ClearShares Ultra i.e., ClearShares Ultra and PGIM Active go up and down completely randomly.

Pair Corralation between ClearShares Ultra and PGIM Active

Given the investment horizon of 90 days ClearShares Ultra is expected to generate 1.16 times less return on investment than PGIM Active. But when comparing it to its historical volatility, ClearShares Ultra Short Maturity is 12.54 times less risky than PGIM Active. It trades about 1.03 of its potential returns per unit of risk. PGIM Active High is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,441  in PGIM Active High on December 29, 2024 and sell it today you would earn a total of  43.00  from holding PGIM Active High or generate 1.25% return on investment over 90 days.

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

ClearShares Ultra Short Maturi  vs.  PGIM Active High

ClearShares Ultra Short

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in ClearShares Ultra Short Maturity are ranked lower than 80 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, ClearShares Ultra is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

PGIM Active High

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Active High are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, PGIM Active is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ClearShares Ultra and PGIM Active

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

The idea behind ClearShares Ultra Short Maturity and PGIM Active High 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.