Correlation Between Prudential Qma and Mid-cap Growth

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Can any of the company-specific risk be diversified away by investing in both Prudential Qma and Mid-cap Growth 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 Qma and Mid-cap Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Qma Mid Cap and Mid Cap Growth Profund, you can compare the effects of market volatilities on Prudential Qma and Mid-cap Growth 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 Qma with a short position of Mid-cap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Qma and Mid-cap Growth.

Diversification Opportunities for Prudential Qma and Mid-cap Growth

0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between Prudential and Mid-cap is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Qma Mid Cap and Mid Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth and Prudential Qma 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 Qma Mid Cap are associated (or correlated) with Mid-cap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of Prudential Qma i.e., Prudential Qma and Mid-cap Growth go up and down completely randomly.

Pair Corralation between Prudential Qma and Mid-cap Growth

Assuming the 90 days horizon Prudential Qma is expected to generate 1.19 times less return on investment than Mid-cap Growth. But when comparing it to its historical volatility, Prudential Qma Mid Cap is 1.07 times less risky than Mid-cap Growth. It trades about 0.27 of its potential returns per unit of risk. Mid Cap Growth Profund is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  10,249  in Mid Cap Growth Profund on April 21, 2025 and sell it today you would earn a total of  498.00  from holding Mid Cap Growth Profund or generate 4.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Prudential Qma Mid Cap  vs.  Mid Cap Growth Profund

 Performance 
       Timeline  
Prudential Qma Mid 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Qma Mid Cap are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Prudential Qma showed solid returns over the last few months and may actually be approaching a breakup point.
Mid Cap Growth 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth Profund are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Mid-cap Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Prudential Qma and Mid-cap Growth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Prudential Qma and Mid-cap Growth

The main advantage of trading using opposite Prudential Qma and Mid-cap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Qma position performs unexpectedly, Mid-cap Growth 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 Mid-cap Growth will offset losses from the drop in Mid-cap Growth's long position.
The idea behind Prudential Qma Mid Cap and Mid Cap Growth Profund 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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