Correlation Between Prudential Qma and Ab Small

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

By analyzing existing cross correlation between Prudential Qma Intl and Ab Small Cap, you can compare the effects of market volatilities on Prudential Qma and Ab Small 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 Qma with a short position of Ab Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Qma and Ab Small.

Diversification Opportunities for Prudential Qma and Ab Small

-0.68

Correlation Coefficient

Prudential Qma  Ab Small

Excellent diversification

The 3 months correlation between Prudential and QUAIX is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Qma Intl and Ab Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Small Cap and Prudential Qma 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 Qma Intl are associated (or correlated) with Ab Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Small Cap has no effect on the direction of Prudential Qma i.e., Prudential Qma and Ab Small go up and down completely randomly.

Pair Corralation between Prudential Qma and Ab Small

Assuming the 90 days horizon Prudential Qma Intl is expected to generate 0.54 times more return on investment than Ab Small. However, Prudential Qma Intl is 1.85 times less risky than Ab Small. It trades about 0.16 of its potential returns per unit of risk. Ab Small Cap is currently generating about -0.13 per unit of risk. If you would invest  748.00  in Prudential Qma Intl on December 30, 2024 and sell it today you would earn a total of  67.00  from holding Prudential Qma Intl or generate 8.96% return on investment over 90 days.

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

Prudential Qma Intl  vs.  Ab Small Cap

Prudential Qma Intl

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Qma Intl are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Prudential Qma may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ab Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ab Small Cap 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 forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Prudential Qma and Ab Small

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

The idea behind Prudential Qma Intl and Ab Small Cap 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..