Correlation Between Embrace Change and PGIM Short
Can any of the company-specific risk be diversified away by investing in both Embrace Change and PGIM Short 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 Embrace Change and PGIM Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embrace Change Acquisition and PGIM Short Duration, you can compare the effects of market volatilities on Embrace Change and PGIM Short 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 Embrace Change with a short position of PGIM Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and PGIM Short.
Diversification Opportunities for Embrace Change and PGIM Short
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Embrace and PGIM is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and PGIM Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Short Duration and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with PGIM Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Short Duration has no effect on the direction of Embrace Change i.e., Embrace Change and PGIM Short go up and down completely randomly.
Pair Corralation between Embrace Change and PGIM Short
Assuming the 90 days horizon Embrace Change Acquisition is expected to under-perform the PGIM Short. In addition to that, Embrace Change is 1.6 times more volatile than PGIM Short Duration. It trades about -0.05 of its total potential returns per unit of risk. PGIM Short Duration is currently generating about 0.19 per unit of volatility. If you would invest 1,577 in PGIM Short Duration on September 2, 2024 and sell it today you would earn a total of 93.00 from holding PGIM Short Duration or generate 5.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embrace Change Acquisition vs. PGIM Short Duration
Performance |
| Timeline |
| Embrace Change Acqui |
| PGIM Short Duration |
Embrace Change and PGIM Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embrace Change and PGIM Short
The main advantage of trading using opposite Embrace Change and PGIM Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change position performs unexpectedly, PGIM Short 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 Short will offset losses from the drop in PGIM Short's long position.The idea behind Embrace Change Acquisition and PGIM Short Duration 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.| PGIM Short vs. John Hancock Income | PGIM Short vs. MFS High Income | PGIM Short vs. MFS Investment Grade | PGIM Short vs. Blackrock Muniholdings Closed |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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