Correlation Between Pgim Global and First Trust

Can any of the company-specific risk be diversified away by investing in both Pgim Global and First Trust 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 Pgim Global and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pgim Global High and First Trust Senior, you can compare the effects of market volatilities on Pgim Global and First Trust 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 Pgim Global with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pgim Global and First Trust.

Diversification Opportunities for Pgim Global and First Trust

0.65

Correlation Coefficient

Pgim Global  First Trust

Poor diversification

The 3 months correlation between Pgim and First is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Global High and First Trust Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Senior and Pgim Global 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 Pgim Global High are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Senior has no effect on the direction of Pgim Global i.e., Pgim Global and First Trust go up and down completely randomly.

Pair Corralation between Pgim Global and First Trust

Considering the 90-day investment horizon Pgim Global High is expected to generate 2.02 times more return on investment than First Trust. However, Pgim Global is 2.02 times more volatile than First Trust Senior. It trades about 0.2 of its potential returns per unit of risk. First Trust Senior is currently generating about 0.01 per unit of risk. If you would invest  1,233  in Pgim Global High on December 26, 2024 and sell it today you would earn a total of  130.00  from holding Pgim Global High or generate 10.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Pgim Global High  vs.  First Trust Senior

Pgim Global High

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Global High are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady technical indicators, Pgim Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

First Trust Senior

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Senior are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, First Trust is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pgim Global and First Trust

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

The idea behind Pgim Global High and First Trust Senior 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.