Correlation Between Pgim Conservative and Dfa Investment

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

By analyzing existing cross correlation between Pgim Conservative Retirement and Dfa Investment Dimensions, you can compare the effects of market volatilities on Pgim Conservative and Dfa Investment 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 Pgim Conservative with a short position of Dfa Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pgim Conservative and Dfa Investment.

Diversification Opportunities for Pgim Conservative and Dfa Investment

0.61

Correlation Coefficient

Pgim Conservative  Dfa Investment

Poor diversification

The 3 months correlation between Pgim and Dfa is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Conservative Retirement and Dfa Investment Dimensions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Investment Dimensions and Pgim Conservative 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 Pgim Conservative Retirement are associated (or correlated) with Dfa Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Investment Dimensions has no effect on the direction of Pgim Conservative i.e., Pgim Conservative and Dfa Investment go up and down completely randomly.

Pair Corralation between Pgim Conservative and Dfa Investment

Assuming the 90 days horizon Pgim Conservative Retirement is expected to generate 10.58 times more return on investment than Dfa Investment. However, Pgim Conservative is 10.58 times more volatile than Dfa Investment Dimensions. It trades about 0.1 of its potential returns per unit of risk. Dfa Investment Dimensions is currently generating about 0.39 per unit of risk. If you would invest  1,017  in Pgim Conservative Retirement on December 19, 2024 and sell it today you would earn a total of  21.00  from holding Pgim Conservative Retirement or generate 2.06% return on investment over 90 days.

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

Pgim Conservative Retirement  vs.  Dfa Investment Dimensions

Pgim Conservative

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Conservative Retirement are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pgim Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dfa Investment Dimensions

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Investment Dimensions are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Dfa Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pgim Conservative and Dfa Investment

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

The idea behind Pgim Conservative Retirement and Dfa Investment Dimensions 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..