Correlation Between Strategy Shares and PGIM Active
Can any of the company-specific risk be diversified away by investing in both Strategy Shares and PGIM Active 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 Strategy Shares and PGIM Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategy Shares NewfoundReSolve and PGIM Active High, you can compare the effects of market volatilities on Strategy Shares and PGIM Active 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 Strategy Shares with a short position of PGIM Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategy Shares and PGIM Active.
Diversification Opportunities for Strategy Shares and PGIM Active
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Strategy and PGIM is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Strategy Shares NewfoundReSolv and PGIM Active High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Active High and Strategy Shares 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 Strategy Shares NewfoundReSolve are associated (or correlated) with PGIM Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Active High has no effect on the direction of Strategy Shares i.e., Strategy Shares and PGIM Active go up and down completely randomly.
Pair Corralation between Strategy Shares and PGIM Active
Given the investment horizon of 90 days Strategy Shares NewfoundReSolve is expected to generate 3.67 times more return on investment than PGIM Active. However, Strategy Shares is 3.67 times more volatile than PGIM Active High. It trades about 0.16 of its potential returns per unit of risk. PGIM Active High is currently generating about 0.24 per unit of risk. If you would invest 3,153 in Strategy Shares NewfoundReSolve on August 31, 2024 and sell it today you would earn a total of 86.00 from holding Strategy Shares NewfoundReSolve or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategy Shares NewfoundReSolv vs. PGIM Active High
Performance |
| Timeline |
| Strategy Shares Newf |
| PGIM Active High |
Strategy Shares and PGIM Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategy Shares and PGIM Active
The main advantage of trading using opposite Strategy Shares and PGIM Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategy Shares position performs unexpectedly, PGIM Active 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 Active will offset losses from the drop in PGIM Active's long position.| Strategy Shares vs. Cambria Trinity ETF | Strategy Shares vs. Northern Lights | Strategy Shares vs. Cambria Global Momentum | Strategy Shares vs. Alpha Architect Value |
| PGIM Active vs. Xtrackers High Beta | PGIM Active vs. Xtrackers Short Duration | PGIM Active vs. FlexShares 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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