Correlation Between Regional Management and PGIM Short
Can any of the company-specific risk be diversified away by investing in both Regional Management 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 Regional Management and PGIM Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and PGIM Short Duration, you can compare the effects of market volatilities on Regional Management 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 Regional Management with a short position of PGIM Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and PGIM Short.
Diversification Opportunities for Regional Management and PGIM Short
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Regional and PGIM is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp 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 Regional Management 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 Regional Management Corp 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 Regional Management i.e., Regional Management and PGIM Short go up and down completely randomly.
Pair Corralation between Regional Management and PGIM Short
Allowing for the 90-day total investment horizon Regional Management Corp is expected to generate 5.61 times more return on investment than PGIM Short. However, Regional Management is 5.61 times more volatile than PGIM Short Duration. It trades about 0.12 of its potential returns per unit of risk. PGIM Short Duration is currently generating about 0.01 per unit of risk. If you would invest 2,867 in Regional Management Corp on August 31, 2024 and sell it today you would earn a total of 217.00 from holding Regional Management Corp or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Regional Management Corp vs. PGIM Short Duration
Performance |
| Timeline |
| Regional Management Corp |
| PGIM Short Duration |
Regional Management and PGIM Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and PGIM Short
The main advantage of trading using opposite Regional Management and PGIM Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management 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.| Regional Management vs. SLM Corp Pb | Regional Management vs. FirstCash | Regional Management vs. Navient Corp | Regional Management vs. Orix Corp Ads |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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