Correlation Between PGIM Short and Flaherty Crumrine

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

Diversification Opportunities for PGIM Short and Flaherty Crumrine

-0.05

Correlation Coefficient

PGIM Short  Flaherty Crumrine

Good diversification

The 3 months correlation between PGIM and Flaherty is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Short Duration and Flaherty Crumrine Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flaherty Crumrine 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 Flaherty Crumrine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flaherty Crumrine has no effect on the direction of PGIM Short i.e., PGIM Short and Flaherty Crumrine go up and down completely randomly.

Pair Corralation between PGIM Short and Flaherty Crumrine

Given the investment horizon of 90 days PGIM Short is expected to generate 1.95 times less return on investment than Flaherty Crumrine. But when comparing it to its historical volatility, PGIM Short Duration is 1.03 times less risky than Flaherty Crumrine. It trades about 0.09 of its potential returns per unit of risk. Flaherty Crumrine Preferred is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  906.00  in Flaherty Crumrine Preferred on September 15, 2024 and sell it today you would earn a total of  12.00  from holding Flaherty Crumrine Preferred or generate 1.32% return on investment over 90 days.

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

PGIM Short Duration  vs.  Flaherty Crumrine Preferred

PGIM Short Duration

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Short Duration are ranked lower than 10 (%) 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.

Flaherty Crumrine

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Flaherty Crumrine Preferred are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy technical and fundamental indicators, Flaherty Crumrine is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PGIM Short and Flaherty Crumrine

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

The idea behind PGIM Short Duration and Flaherty Crumrine Preferred 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.