Correlation Between Prudential Emerging and Ab Select

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

By analyzing existing cross correlation between Prudential Emerging Markets and Ab Select Longshort, you can compare the effects of market volatilities on Prudential Emerging and Ab Select 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 Emerging with a short position of Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Emerging and Ab Select.

Diversification Opportunities for Prudential Emerging and Ab Select

0.9

Correlation Coefficient

Prudential Emerging  Ab Select

Almost no diversification

The 3 months correlation between Prudential and ASCLX is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Emerging Markets and Ab Select Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Longshort and Prudential Emerging 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 Emerging Markets are associated (or correlated) with Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Longshort has no effect on the direction of Prudential Emerging i.e., Prudential Emerging and Ab Select go up and down completely randomly.

Pair Corralation between Prudential Emerging and Ab Select

Assuming the 90 days horizon Prudential Emerging Markets is expected to under-perform the Ab Select. But the mutual fund apears to be less risky and, when comparing its historical volatility, Prudential Emerging Markets is 1.26 times less risky than Ab Select. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Ab Select Longshort is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  1,373  in Ab Select Longshort on July 15, 2025 and sell it today you would lose (11.00) from holding Ab Select Longshort or give up 0.8% of portfolio value over 90 days.

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

Prudential Emerging Markets  vs.  Ab Select Longshort

Prudential Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Emerging Markets are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ab Select Longshort

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Select Longshort are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Ab Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prudential Emerging and Ab Select

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

The idea behind Prudential Emerging Markets and Ab Select Longshort 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.