Correlation Between PGIM Active and FlexShares High
Can any of the company-specific risk be diversified away by investing in both PGIM Active and FlexShares High 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 Active and FlexShares High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGIM Active High and FlexShares High Yield, you can compare the effects of market volatilities on PGIM Active and FlexShares High 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 Active with a short position of FlexShares High. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM Active and FlexShares High.
Diversification Opportunities for PGIM Active and FlexShares High
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PGIM and FlexShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Active High and FlexShares High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares High Yield and PGIM Active 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 Active High are associated (or correlated) with FlexShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares High Yield has no effect on the direction of PGIM Active i.e., PGIM Active and FlexShares High go up and down completely randomly.
Pair Corralation between PGIM Active and FlexShares High
Given the investment horizon of 90 days PGIM Active High is expected to generate 0.97 times more return on investment than FlexShares High. However, PGIM Active High is 1.04 times less risky than FlexShares High. It trades about 0.17 of its potential returns per unit of risk. FlexShares High Yield is currently generating about 0.15 per unit of risk. If you would invest 3,280 in PGIM Active High on September 1, 2024 and sell it today you would earn a total of 264.00 from holding PGIM Active High or generate 8.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
PGIM Active High vs. FlexShares High Yield
Performance |
| Timeline |
| PGIM Active High |
| FlexShares High Yield |
PGIM Active and FlexShares High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGIM Active and FlexShares High
The main advantage of trading using opposite PGIM Active and FlexShares High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM Active position performs unexpectedly, FlexShares High 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 FlexShares High will offset losses from the drop in FlexShares High's long position.| PGIM Active vs. Xtrackers High Beta | PGIM Active vs. Xtrackers Short Duration | PGIM Active vs. FlexShares High Yield | PGIM Active vs. Franklin Liberty High |
| FlexShares High vs. Xtrackers High Beta | FlexShares High vs. iShares Edge High | FlexShares High vs. Xtrackers USD High | FlexShares High vs. iShares Interest Rate |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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