Correlation Between PGIM Ultra and Cambria Emerging

Can any of the company-specific risk be diversified away by investing in both PGIM Ultra and Cambria Emerging 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 Cambria Emerging 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 Cambria Emerging Shareholder, you can compare the effects of market volatilities on PGIM Ultra and Cambria Emerging 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 Cambria Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM Ultra and Cambria Emerging.

Diversification Opportunities for PGIM Ultra and Cambria Emerging

-0.23

Correlation Coefficient

PGIM Ultra  Cambria Emerging

Very good diversification

The 3 months correlation between PGIM and Cambria is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Ultra Short and Cambria Emerging Shareholder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Emerging Sha 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 Cambria Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Emerging Sha has no effect on the direction of PGIM Ultra i.e., PGIM Ultra and Cambria Emerging go up and down completely randomly.

Pair Corralation between PGIM Ultra and Cambria Emerging

Given the investment horizon of 90 days PGIM Ultra Short is expected to generate 0.03 times more return on investment than Cambria Emerging. However, PGIM Ultra Short is 31.28 times less risky than Cambria Emerging. It trades about 0.64 of its potential returns per unit of risk. Cambria Emerging Shareholder is currently generating about -0.07 per unit of risk. If you would invest  4,909  in PGIM Ultra Short on August 30, 2024 and sell it today you would earn a total of  68.00  from holding PGIM Ultra Short or generate 1.39% return on investment over 90 days.

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

PGIM Ultra Short  vs.  Cambria Emerging Shareholder

PGIM Ultra Short

Risk-Adjusted Performance

0 of 100

Excellent

Over the last 90 days PGIM Ultra Short has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Cambria Emerging Sha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambria Emerging Shareholder has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Cambria Emerging is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PGIM Ultra and Cambria Emerging

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

The idea behind PGIM Ultra Short and Cambria Emerging Shareholder 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.