Correlation Between Western Asset and Pgim Global

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

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

Diversification Opportunities for Western Asset and Pgim Global

0.88

Correlation Coefficient

Western Asset  Pgim Global

Very poor diversification

The 3 months correlation between Western and Pgim is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Pgim Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Global High and Western Asset 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 Western Asset High are associated (or correlated) with Pgim Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim Global High has no effect on the direction of Western Asset i.e., Western Asset and Pgim Global go up and down completely randomly.

Pair Corralation between Western Asset and Pgim Global

Considering the 90-day investment horizon Western Asset is expected to generate 1.26 times less return on investment than Pgim Global. But when comparing it to its historical volatility, Western Asset High is 1.2 times less risky than Pgim Global. It trades about 0.11 of its potential returns per unit of risk. Pgim Global High is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,227  in Pgim Global High on September 13, 2024 and sell it today you would earn a total of  65.00  from holding Pgim Global High or generate 5.3% return on investment over 90 days.

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

Western Asset High  vs.  Pgim Global High

Western Asset High

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset High are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Western Asset is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pgim Global High

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Global High are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Pgim Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Western Asset and Pgim Global

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

The idea behind Western Asset High and Pgim Global High 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.