Correlation Between PGIM Ultra and Capital Group
Can any of the company-specific risk be diversified away by investing in both PGIM Ultra and Capital Group 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 Ultra and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGIM Ultra Short and Capital Group International, you can compare the effects of market volatilities on PGIM Ultra and Capital Group 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 Ultra with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM Ultra and Capital Group.
Diversification Opportunities for PGIM Ultra and Capital Group
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PGIM and Capital is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Ultra Short and Capital Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Intern and PGIM Ultra 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 Ultra Short are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Intern has no effect on the direction of PGIM Ultra i.e., PGIM Ultra and Capital Group go up and down completely randomly.
Pair Corralation between PGIM Ultra and Capital Group
Given the investment horizon of 90 days PGIM Ultra is expected to generate 1.86 times less return on investment than Capital Group. But when comparing it to its historical volatility, PGIM Ultra Short is 17.63 times less risky than Capital Group. It trades about 0.44 of its potential returns per unit of risk. Capital Group International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,116 in Capital Group International on August 30, 2024 and sell it today you would earn a total of 462.00 from holding Capital Group International or generate 21.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
PGIM Ultra Short vs. Capital Group International
Performance |
| Timeline |
| PGIM Ultra Short |
| Capital Group Intern |
PGIM Ultra and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGIM Ultra and Capital Group
The main advantage of trading using opposite PGIM Ultra and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM Ultra position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| PGIM Ultra vs. Rbb Fund | PGIM Ultra vs. US Treasury 12 | PGIM Ultra vs. Rbb Fund | PGIM Ultra vs. Rbb Fund |
| Capital Group vs. Stance Equity ESG | Capital Group vs. Aquagold International | Capital Group vs. Morningstar Unconstrained Allocation | Capital Group vs. Thrivent High Yield |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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