Correlation Between PGIM Active and ClearShares Ultra

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

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

Diversification Opportunities for PGIM Active and ClearShares Ultra

0.67

Correlation Coefficient

PGIM Active  ClearShares Ultra

Poor diversification

The 3 months correlation between PGIM and ClearShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Active High and ClearShares Ultra Short Maturi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearShares Ultra Short and PGIM Active 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 Active High are associated (or correlated) with ClearShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearShares Ultra Short has no effect on the direction of PGIM Active i.e., PGIM Active and ClearShares Ultra go up and down completely randomly.

Pair Corralation between PGIM Active and ClearShares Ultra

Given the investment horizon of 90 days PGIM Active High is expected to generate 12.68 times more return on investment than ClearShares Ultra. However, PGIM Active is 12.68 times more volatile than ClearShares Ultra Short Maturity. It trades about 0.12 of its potential returns per unit of risk. ClearShares Ultra Short Maturity is currently generating about 1.02 per unit of risk. If you would invest  3,436  in PGIM Active High on December 27, 2024 and sell it today you would earn a total of  55.00  from holding PGIM Active High or generate 1.6% return on investment over 90 days.

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

PGIM Active High  vs.  ClearShares Ultra Short Maturi

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 9 (%) 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.

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.

Pair Trading with PGIM Active and ClearShares Ultra

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

The idea behind PGIM Active High and ClearShares Ultra Short Maturity 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.