Correlation Between TrueShares Structured and PGIM Active

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

By analyzing existing cross correlation between TrueShares Structured Outcome and PGIM Active High, you can compare the effects of market volatilities on TrueShares Structured and PGIM Active 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 TrueShares Structured with a short position of PGIM Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of TrueShares Structured and PGIM Active.

Diversification Opportunities for TrueShares Structured and PGIM Active

0.82

Correlation Coefficient

TrueShares Structured  PGIM Active

Very poor diversification

The 3 months correlation between TrueShares and PGIM is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding TrueShares Structured Outcome and PGIM Active High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Active High and TrueShares Structured 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 TrueShares Structured Outcome are associated (or correlated) with PGIM Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Active High has no effect on the direction of TrueShares Structured i.e., TrueShares Structured and PGIM Active go up and down completely randomly.

Pair Corralation between TrueShares Structured and PGIM Active

Given the investment horizon of 90 days TrueShares Structured Outcome is expected to under-perform the PGIM Active. In addition to that, TrueShares Structured is 2.47 times more volatile than PGIM Active High. It trades about -0.05 of its total potential returns per unit of risk. PGIM Active High is currently generating about 0.0 per unit of volatility. If you would invest  3,486  in PGIM Active High on October 10, 2024 and sell it today you would earn a total of  1.00  from holding PGIM Active High or generate 0.03% return on investment over 90 days.

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

TrueShares Structured Outcome  vs.  PGIM Active High

TrueShares Structured

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TrueShares Structured Outcome are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, TrueShares Structured is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

PGIM Active High

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Active High are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, PGIM Active is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with TrueShares Structured and PGIM Active

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

The idea behind TrueShares Structured Outcome and PGIM Active High 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.