Correlation Between Commodities Strategy and Prudential Emerging
Can any of the company-specific risk be diversified away by investing in both Commodities Strategy and Prudential 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 Commodities Strategy and Prudential Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commodities Strategy Fund and Prudential Emerging Markets, you can compare the effects of market volatilities on Commodities Strategy and Prudential 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 Commodities Strategy with a short position of Prudential Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and Prudential Emerging.
Diversification Opportunities for Commodities Strategy and Prudential Emerging
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Commodities and Prudential is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund and Prudential Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Emerging and Commodities Strategy 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 Commodities Strategy Fund are associated (or correlated) with Prudential Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Emerging has no effect on the direction of Commodities Strategy i.e., Commodities Strategy and Prudential Emerging go up and down completely randomly.
Pair Corralation between Commodities Strategy and Prudential Emerging
Assuming the 90 days horizon Commodities Strategy is expected to generate 1.23 times less return on investment than Prudential Emerging. In addition to that, Commodities Strategy is 3.79 times more volatile than Prudential Emerging Markets. It trades about 0.07 of its total potential returns per unit of risk. Prudential Emerging Markets is currently generating about 0.34 per unit of volatility. If you would invest 475.00 in Prudential Emerging Markets on April 4, 2025 and sell it today you would earn a total of 13.00 from holding Prudential Emerging Markets or generate 2.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commodities Strategy Fund vs. Prudential Emerging Markets
Performance |
| Timeline |
| Commodities Strategy |
| Prudential Emerging |
Commodities Strategy and Prudential Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commodities Strategy and Prudential Emerging
The main advantage of trading using opposite Commodities Strategy and Prudential Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodities Strategy position performs unexpectedly, Prudential 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 Prudential Emerging will offset losses from the drop in Prudential Emerging's long position.| Commodities Strategy vs. Pnc Emerging Markets | Commodities Strategy vs. Morningstar Defensive Bond | Commodities Strategy vs. Multisector Bond Sma | Commodities Strategy vs. Artisan High Income |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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