Correlation Between PGIM Ultra and CHIM

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

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

Diversification Opportunities for PGIM Ultra and CHIM

-0.71

Correlation Coefficient

PGIM Ultra  CHIM

Pay attention - limited upside

The 3 months correlation between PGIM and CHIM is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Ultra Short and CHIM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIM and PGIM Ultra 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 Ultra Short are associated (or correlated) with CHIM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIM has no effect on the direction of PGIM Ultra i.e., PGIM Ultra and CHIM go up and down completely randomly.

Pair Corralation between PGIM Ultra and CHIM

If you would invest  4,612  in PGIM Ultra Short on October 1, 2024 and sell it today you would earn a total of  340.00  from holding PGIM Ultra Short or generate 7.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	0.35%
Values	Daily Returns

PGIM Ultra Short  vs.  CHIM

PGIM Ultra Short

Risk-Adjusted Performance

52 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Ultra Short are ranked lower than 52 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, PGIM Ultra is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CHIM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHIM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, CHIM is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PGIM Ultra and CHIM

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

The idea behind PGIM Ultra Short and CHIM 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.