Correlation Between Prudential Qma and Oshaughnessy Market

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

By analyzing existing cross correlation between Prudential Qma Mid Cap and Oshaughnessy Market Leaders, you can compare the effects of market volatilities on Prudential Qma and Oshaughnessy Market 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 Oshaughnessy Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Qma and Oshaughnessy Market.

Diversification Opportunities for Prudential Qma and Oshaughnessy Market

0.91

Correlation Coefficient

Prudential Qma  Oshaughnessy Market

Almost no diversification

The 3 months correlation between Prudential and Oshaughnessy is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Qma Mid Cap and Oshaughnessy Market Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oshaughnessy Market 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 Mid Cap are associated (or correlated) with Oshaughnessy Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oshaughnessy Market has no effect on the direction of Prudential Qma i.e., Prudential Qma and Oshaughnessy Market go up and down completely randomly.

Pair Corralation between Prudential Qma and Oshaughnessy Market

Assuming the 90 days horizon Prudential Qma Mid Cap is expected to under-perform the Oshaughnessy Market. In addition to that, Prudential Qma is 1.19 times more volatile than Oshaughnessy Market Leaders. It trades about -0.07 of its total potential returns per unit of risk. Oshaughnessy Market Leaders is currently generating about -0.04 per unit of volatility. If you would invest  2,150  in Oshaughnessy Market Leaders on October 24, 2024 and sell it today you would lose (116.00) from holding Oshaughnessy Market Leaders or give up 5.4% of portfolio value over 90 days.

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

Prudential Qma Mid Cap  vs.  Oshaughnessy Market Leaders

Prudential Qma Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Qma Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Oshaughnessy Market

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oshaughnessy Market Leaders has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Oshaughnessy Market is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prudential Qma and Oshaughnessy Market

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

The idea behind Prudential Qma Mid Cap and Oshaughnessy Market Leaders 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.