Correlation Between Pgim High and Columbia Government

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

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

Diversification Opportunities for Pgim High and Columbia Government

-0.34

Correlation Coefficient

Pgim High  Columbia Government

Very good diversification

The 3 months correlation between Pgim and Columbia is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pgim High Yield and Columbia Government Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Government and Pgim High 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 High Yield are associated (or correlated) with Columbia Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Government has no effect on the direction of Pgim High i.e., Pgim High and Columbia Government go up and down completely randomly.

Pair Corralation between Pgim High and Columbia Government

If you would invest  1,369  in Pgim High Yield on October 23, 2024 and sell it today you would earn a total of  10.00  from holding Pgim High Yield or generate 0.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.56%
Values	Daily Returns

Pgim High Yield  vs.  Columbia Government Mortgage

Pgim High Yield

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim High Yield are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound basic indicators, Pgim High is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.

Columbia Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Government Mortgage has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Columbia Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pgim High and Columbia Government

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

The idea behind Pgim High Yield and Columbia Government Mortgage 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.