Correlation Between PGIM Short and Tekla World
Can any of the company-specific risk be diversified away by investing in both PGIM Short and Tekla World 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 Tekla World 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 Tekla World Healthcare, you can compare the effects of market volatilities on PGIM Short and Tekla World 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 Tekla World. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM Short and Tekla World.
Diversification Opportunities for PGIM Short and Tekla World
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PGIM and Tekla is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Short Duration and Tekla World Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla World Healthcare 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 Tekla World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla World Healthcare has no effect on the direction of PGIM Short i.e., PGIM Short and Tekla World go up and down completely randomly.
Pair Corralation between PGIM Short and Tekla World
Given the investment horizon of 90 days PGIM Short Duration is expected to generate 0.48 times more return on investment than Tekla World. However, PGIM Short Duration is 2.07 times less risky than Tekla World. It trades about 0.05 of its potential returns per unit of risk. Tekla World Healthcare is currently generating about 0.01 per unit of risk. If you would invest 1,634 in PGIM Short Duration on November 1, 2024 and sell it today you would earn a total of 25.00 from holding PGIM Short Duration or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PGIM Short Duration vs. Tekla World Healthcare
Performance |
| Timeline |
| PGIM Short Duration |
| Tekla World Healthcare |
PGIM Short and Tekla World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGIM Short and Tekla World
The main advantage of trading using opposite PGIM Short and Tekla World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM Short position performs unexpectedly, Tekla World 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 Tekla World will offset losses from the drop in Tekla World'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 |
| Tekla World vs. Tekla Healthcare Investors | Tekla World vs. Tekla Life Sciences | Tekla World vs. Flaherty and Crumrine | Tekla World vs. Tekla Healthcare Opportunities |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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