Correlation Between Short Oil and Prudential Short-term
Can any of the company-specific risk be diversified away by investing in both Short Oil and Prudential Short-term 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 Short Oil and Prudential Short-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Oil Gas and Prudential Short Term Porate, you can compare the effects of market volatilities on Short Oil and Prudential Short-term 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 Short Oil with a short position of Prudential Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Oil and Prudential Short-term.
Diversification Opportunities for Short Oil and Prudential Short-term
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Short and Prudential is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Short Oil Gas and Prudential Short Term Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Short Term and Short Oil 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 Short Oil Gas are associated (or correlated) with Prudential Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Short Term has no effect on the direction of Short Oil i.e., Short Oil and Prudential Short-term go up and down completely randomly.
Pair Corralation between Short Oil and Prudential Short-term
Assuming the 90 days horizon Short Oil Gas is expected to generate 12.12 times more return on investment than Prudential Short-term. However, Short Oil is 12.12 times more volatile than Prudential Short Term Porate. It trades about 0.06 of its potential returns per unit of risk. Prudential Short Term Porate is currently generating about 0.09 per unit of risk. If you would invest 1,315 in Short Oil Gas on April 1, 2025 and sell it today you would earn a total of 102.00 from holding Short Oil Gas or generate 7.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Oil Gas vs. Prudential Short Term Porate
Performance |
| Timeline |
| Short Oil Gas |
| Prudential Short Term |
Short Oil and Prudential Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Oil and Prudential Short-term
The main advantage of trading using opposite Short Oil and Prudential Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Oil position performs unexpectedly, Prudential Short-term 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 Short-term will offset losses from the drop in Prudential Short-term's long position.| Short Oil vs. Prudential High Yield | Short Oil vs. Pace High Yield | Short Oil vs. Multi Manager High Yield | Short Oil vs. Calvert High Yield |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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