Correlation Between Cm Commodity and Prudential Qma

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

By analyzing existing cross correlation between Cm Modity Index and Prudential Qma Small Cap, you can compare the effects of market volatilities on Cm Commodity and Prudential Qma 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 Cm Commodity with a short position of Prudential Qma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cm Commodity and Prudential Qma.

Diversification Opportunities for Cm Commodity and Prudential Qma

0.3

Correlation Coefficient

Cm Commodity  Prudential Qma

Weak diversification

The 3 months correlation between COMIX and Prudential is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cm Modity Index and Prudential Qma Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Qma Small and Cm Commodity 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 Cm Modity Index are associated (or correlated) with Prudential Qma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Qma Small has no effect on the direction of Cm Commodity i.e., Cm Commodity and Prudential Qma go up and down completely randomly.

Pair Corralation between Cm Commodity and Prudential Qma

Assuming the 90 days horizon Cm Commodity is expected to generate 4.87 times less return on investment than Prudential Qma. But when comparing it to its historical volatility, Cm Modity Index is 1.93 times less risky than Prudential Qma. It trades about 0.08 of its potential returns per unit of risk. Prudential Qma Small Cap is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,586  in Prudential Qma Small Cap on May 25, 2025 and sell it today you would earn a total of  241.00  from holding Prudential Qma Small Cap or generate 15.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cm Modity Index  vs.  Prudential Qma Small Cap

Cm Modity Index

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Cm Modity Index are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Cm Commodity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prudential Qma Small

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Qma Small Cap are ranked lower than 15 (%) 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.

Pair Trading with Cm Commodity and Prudential Qma

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

The idea behind Cm Modity Index and Prudential Qma Small Cap 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.