Correlation Between PGIM Short and Ares Dynamic
Can any of the company-specific risk be diversified away by investing in both PGIM Short and Ares Dynamic 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 Short and Ares Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGIM Short Duration and Ares Dynamic Credit, you can compare the effects of market volatilities on PGIM Short and Ares Dynamic 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 Short with a short position of Ares Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM Short and Ares Dynamic.
Diversification Opportunities for PGIM Short and Ares Dynamic
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PGIM and Ares is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Short Duration and Ares Dynamic Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Dynamic Credit and PGIM Short 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 Short Duration are associated (or correlated) with Ares Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Dynamic Credit has no effect on the direction of PGIM Short i.e., PGIM Short and Ares Dynamic go up and down completely randomly.
Pair Corralation between PGIM Short and Ares Dynamic
Given the investment horizon of 90 days PGIM Short is expected to generate 1.49 times less return on investment than Ares Dynamic. But when comparing it to its historical volatility, PGIM Short Duration is 1.03 times less risky than Ares Dynamic. It trades about 0.1 of its potential returns per unit of risk. Ares Dynamic Credit is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,501 in Ares Dynamic Credit on August 27, 2024 and sell it today you would earn a total of 26.00 from holding Ares Dynamic Credit or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PGIM Short Duration vs. Ares Dynamic Credit
Performance |
| Timeline |
| PGIM Short Duration |
| Ares Dynamic Credit |
PGIM Short and Ares Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGIM Short and Ares Dynamic
The main advantage of trading using opposite PGIM Short and Ares Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM Short position performs unexpectedly, Ares Dynamic 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 Ares Dynamic will offset losses from the drop in Ares Dynamic's long position.| PGIM Short vs. John Hancock Income | PGIM Short vs. MFS High Income | PGIM Short vs. MFS Investment Grade | PGIM Short vs. Blackrock Muniholdings Closed |
| Ares Dynamic vs. Eaton Vance Floating | Ares Dynamic vs. NXG NextGen Infrastructure | Ares Dynamic vs. GAMCO Natural Resources | Ares Dynamic vs. MFS Investment Grade |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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