Correlation Between PGIM Short and Ares Dynamic

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

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

Diversification Opportunities for PGIM Short and Ares Dynamic

0.56

Correlation Coefficient

PGIM Short  Ares Dynamic

Very weak diversification

The 3 months correlation between PGIM and Ares is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Short Duration and Ares Dynamic Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Dynamic Credit and PGIM Short 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 Short Duration are associated (or correlated) with Ares Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Dynamic Credit has no effect on the direction of PGIM Short i.e., PGIM Short and Ares Dynamic go up and down completely randomly.

Pair Corralation between PGIM Short and Ares Dynamic

Given the investment horizon of 90 days PGIM Short Duration is expected to generate 0.79 times more return on investment than Ares Dynamic. However, PGIM Short Duration is 1.27 times less risky than Ares Dynamic. It trades about -0.17 of its potential returns per unit of risk. Ares Dynamic Credit is currently generating about -0.18 per unit of risk. If you would invest  1,649  in PGIM Short Duration on September 23, 2024 and sell it today you would lose (27.00) from holding PGIM Short Duration or give up 1.64% of portfolio value over 90 days.

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

PGIM Short Duration  vs.  Ares Dynamic Credit

PGIM Short Duration

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Short Duration are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, PGIM Short is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ares Dynamic Credit

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Dynamic Credit are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound fundamental indicators, Ares Dynamic is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PGIM Short and Ares Dynamic

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

The idea behind PGIM Short Duration and Ares Dynamic Credit 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.