Correlation Between PGIM Short and MainStay CBRE

Can any of the company-specific risk be diversified away by investing in both PGIM Short and MainStay CBRE 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 MainStay CBRE 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 MainStay CBRE Global, you can compare the effects of market volatilities on PGIM Short and MainStay CBRE 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 MainStay CBRE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM Short and MainStay CBRE.

Diversification Opportunities for PGIM Short and MainStay CBRE

0.69

Correlation Coefficient

PGIM Short  MainStay CBRE

Poor diversification

The 3 months correlation between PGIM and MainStay is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Short Duration and MainStay CBRE Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MainStay CBRE Global 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 MainStay CBRE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MainStay CBRE Global has no effect on the direction of PGIM Short i.e., PGIM Short and MainStay CBRE go up and down completely randomly.

Pair Corralation between PGIM Short and MainStay CBRE

Given the investment horizon of 90 days PGIM Short is expected to generate 2.75 times less return on investment than MainStay CBRE. But when comparing it to its historical volatility, PGIM Short Duration is 2.94 times less risky than MainStay CBRE. It trades about 0.18 of its potential returns per unit of risk. MainStay CBRE Global is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,179  in MainStay CBRE Global on December 28, 2024 and sell it today you would earn a total of  134.00  from holding MainStay CBRE Global or generate 11.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

PGIM Short Duration  vs.  MainStay CBRE Global

PGIM Short Duration

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Short Duration are ranked lower than 14 (%) 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 newest stock price disturbance, may contribute to short-term losses for the investors.

MainStay CBRE Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MainStay CBRE Global are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, MainStay CBRE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PGIM Short and MainStay CBRE

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

The idea behind PGIM Short Duration and MainStay CBRE Global 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..