Correlation Between PGIM Ultra and Global X

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

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

Diversification Opportunities for PGIM Ultra and Global X

-0.75

Correlation Coefficient

PGIM Ultra  Global X

Pay attention - limited upside

The 3 months correlation between PGIM and Global is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Ultra Short and Global X FTSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X FTSE and PGIM 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 PGIM Ultra Short are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X FTSE has no effect on the direction of PGIM Ultra i.e., PGIM Ultra and Global X go up and down completely randomly.

Pair Corralation between PGIM Ultra and Global X

Given the investment horizon of 90 days PGIM Ultra is expected to generate 1.12 times less return on investment than Global X. But when comparing it to its historical volatility, PGIM Ultra Short is 15.73 times less risky than Global X. It trades about 0.44 of its potential returns per unit of risk. Global X FTSE is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,440  in Global X FTSE on October 11, 2024 and sell it today you would earn a total of  174.00  from holding Global X FTSE or generate 12.08% return on investment over 90 days.

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

PGIM Ultra Short  vs.  Global X FTSE

PGIM Ultra Short

Risk-Adjusted Performance

57 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Ultra Short are ranked lower than 57 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, PGIM Ultra is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Global X FTSE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X FTSE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Global X is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PGIM Ultra and Global X

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

The idea behind PGIM Ultra Short and Global X FTSE 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.