Correlation Between Prudential Short and Oakmark Fund

Can any of the company-specific risk be diversified away by investing in both Prudential Short and Oakmark Fund 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 Prudential Short and Oakmark Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prudential Short Duration and Oakmark Fund Institutional, you can compare the effects of market volatilities on Prudential Short and Oakmark Fund 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 Prudential Short with a short position of Oakmark Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Short and Oakmark Fund.

Diversification Opportunities for Prudential Short and Oakmark Fund

0.5

Correlation Coefficient

Prudential Short  Oakmark Fund

Very weak diversification

The 3 months correlation between Prudential and Oakmark is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Short Duration and Oakmark Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Fund Institu and Prudential 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 Prudential Short Duration are associated (or correlated) with Oakmark Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Fund Institu has no effect on the direction of Prudential Short i.e., Prudential Short and Oakmark Fund go up and down completely randomly.

Pair Corralation between Prudential Short and Oakmark Fund

Assuming the 90 days horizon Prudential Short is expected to generate 14.18 times less return on investment than Oakmark Fund. But when comparing it to its historical volatility, Prudential Short Duration is 6.36 times less risky than Oakmark Fund. It trades about 0.08 of its potential returns per unit of risk. Oakmark Fund Institutional is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  14,661  in Oakmark Fund Institutional on September 13, 2024 and sell it today you would earn a total of  1,267  from holding Oakmark Fund Institutional or generate 8.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Prudential Short Duration  vs.  Oakmark Fund Institutional

Prudential Short Duration

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Short Duration are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oakmark Fund Institu

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark Fund Institutional are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Oakmark Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Prudential Short and Oakmark Fund

The main advantage of trading using opposite Prudential Short and Oakmark Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Short position performs unexpectedly, Oakmark Fund 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 Oakmark Fund will offset losses from the drop in Oakmark Fund's long position.

The idea behind Prudential Short Duration and Oakmark Fund Institutional pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.