Correlation Between Prudential Qma and Channing Intrinsic

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

By analyzing existing cross correlation between Prudential Qma Small Cap and Channing Intrinsic Value, you can compare the effects of market volatilities on Prudential Qma and Channing Intrinsic 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 Channing Intrinsic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Qma and Channing Intrinsic.

Diversification Opportunities for Prudential Qma and Channing Intrinsic

0.99

Correlation Coefficient

Prudential Qma  Channing Intrinsic

No risk reduction

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

Pair Corralation between Prudential Qma and Channing Intrinsic

Assuming the 90 days horizon Prudential Qma is expected to generate 1.44 times less return on investment than Channing Intrinsic. But when comparing it to its historical volatility, Prudential Qma Small Cap is 1.12 times less risky than Channing Intrinsic. It trades about 0.18 of its potential returns per unit of risk. Channing Intrinsic Value is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  924.00  in Channing Intrinsic Value on May 1, 2025 and sell it today you would earn a total of  183.00  from holding Channing Intrinsic Value or generate 19.81% return on investment over 90 days.

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

Prudential Qma Small Cap  vs.  Channing Intrinsic Value

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 14 (%) 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.

Channing Intrinsic Value

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Channing Intrinsic Value are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Channing Intrinsic showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prudential Qma and Channing Intrinsic

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

The idea behind Prudential Qma Small Cap and Channing Intrinsic Value 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.