Correlation Between American Express and PGIM Ultra
Can any of the company-specific risk be diversified away by investing in both American Express and PGIM Ultra 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 American Express and PGIM Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and PGIM Ultra Short, you can compare the effects of market volatilities on American Express and PGIM Ultra 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 American Express with a short position of PGIM Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and PGIM Ultra.
Diversification Opportunities for American Express and PGIM Ultra
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and PGIM is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Express and PGIM Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Ultra Short and American Express 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 American Express are associated (or correlated) with PGIM Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Ultra Short has no effect on the direction of American Express i.e., American Express and PGIM Ultra go up and down completely randomly.
Pair Corralation between American Express and PGIM Ultra
Considering the 90-day investment horizon American Express is expected to generate 69.96 times more return on investment than PGIM Ultra. However, American Express is 69.96 times more volatile than PGIM Ultra Short. It trades about 0.18 of its potential returns per unit of risk. PGIM Ultra Short is currently generating about 0.62 per unit of risk. If you would invest 27,240 in American Express on August 23, 2024 and sell it today you would earn a total of 2,060 from holding American Express or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. PGIM Ultra Short
Performance |
| Timeline |
| American Express |
| PGIM Ultra Short |
American Express and PGIM Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and PGIM Ultra
The main advantage of trading using opposite American Express and PGIM Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, PGIM Ultra 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 Ultra will offset losses from the drop in PGIM Ultra's long position.| American Express vs. Small Cap Core | American Express vs. Morningstar Unconstrained Allocation | American Express vs. Mutual Of America | American Express vs. Ep Emerging Markets |
| PGIM Ultra vs. SPDR Bloomberg 1 3 | PGIM Ultra vs. JPMorgan Ultra Short Income | PGIM Ultra vs. iShares Ultra Short Term | PGIM Ultra vs. First Trust Enhanced |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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