Correlation Between Pgim Securitized and Prudential Qma

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

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

Diversification Opportunities for Pgim Securitized and Prudential Qma

0.78

Correlation Coefficient

Pgim Securitized  Prudential Qma

Poor diversification

The 3 months correlation between Pgim and Prudential is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Securitized Credit and Prudential Qma Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Qma Mid and Pgim Securitized 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 Securitized Credit are associated (or correlated) with Prudential Qma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Qma Mid has no effect on the direction of Pgim Securitized i.e., Pgim Securitized and Prudential Qma go up and down completely randomly.

Pair Corralation between Pgim Securitized and Prudential Qma

Assuming the 90 days horizon Pgim Securitized is expected to generate 5.96 times less return on investment than Prudential Qma. But when comparing it to its historical volatility, Pgim Securitized Credit is 7.29 times less risky than Prudential Qma. It trades about 0.21 of its potential returns per unit of risk. Prudential Qma Mid Cap is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,466  in Prudential Qma Mid Cap on September 4, 2024 and sell it today you would earn a total of  217.00  from holding Prudential Qma Mid Cap or generate 8.8% return on investment over 90 days.

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

Pgim Securitized Credit  vs.  Prudential Qma Mid Cap

Pgim Securitized Credit

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Securitized Credit are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pgim Securitized is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prudential Qma Mid

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Qma Mid Cap are ranked lower than 13 (%) 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 January 2025.

Pair Trading with Pgim Securitized and Prudential Qma

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

The idea behind Pgim Securitized Credit and Prudential Qma Mid 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.