Correlation Between Prudential Qma and Short Oil

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

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

Diversification Opportunities for Prudential Qma and Short Oil

-0.64

Correlation Coefficient

Prudential Qma  Short Oil

Excellent diversification

The 3 months correlation between Prudential and Short is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Qma Strategic and Short Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Oil Gas and Prudential Qma 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 Prudential Qma Strategic are associated (or correlated) with Short Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Oil Gas has no effect on the direction of Prudential Qma i.e., Prudential Qma and Short Oil go up and down completely randomly.

Pair Corralation between Prudential Qma and Short Oil

Assuming the 90 days horizon Prudential Qma Strategic is expected to under-perform the Short Oil. In addition to that, Prudential Qma is 1.44 times more volatile than Short Oil Gas. It trades about -0.14 of its total potential returns per unit of risk. Short Oil Gas is currently generating about 0.08 per unit of volatility. If you would invest  1,349  in Short Oil Gas on December 4, 2024 and sell it today you would earn a total of  79.00  from holding Short Oil Gas or generate 5.86% return on investment over 90 days.

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

Prudential Qma Strategic  vs.  Short Oil Gas

Prudential Qma Strategic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential Qma Strategic has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Short Oil Gas

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Short Oil Gas are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Short Oil may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Prudential Qma and Short Oil

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

The idea behind Prudential Qma Strategic and Short Oil Gas 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.