Correlation Between Pgim Conservative and Columbia Flexible

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

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

Diversification Opportunities for Pgim Conservative and Columbia Flexible

0.85

Correlation Coefficient

Pgim Conservative  Columbia Flexible

Very poor diversification

The 3 months correlation between Pgim and Columbia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Conservative Retirement and Columbia Flexible Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Flexible Capital and Pgim Conservative 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 Conservative Retirement are associated (or correlated) with Columbia Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Flexible Capital has no effect on the direction of Pgim Conservative i.e., Pgim Conservative and Columbia Flexible go up and down completely randomly.

Pair Corralation between Pgim Conservative and Columbia Flexible

Assuming the 90 days horizon Pgim Conservative Retirement is expected to under-perform the Columbia Flexible. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pgim Conservative Retirement is 1.32 times less risky than Columbia Flexible. The mutual fund trades about -0.37 of its potential returns per unit of risk. The Columbia Flexible Capital is currently generating about -0.27 of returns per unit of risk over similar time horizon. If you would invest  1,462  in Columbia Flexible Capital on October 8, 2024 and sell it today you would lose (48.00) from holding Columbia Flexible Capital or give up 3.28% of portfolio value over 90 days.

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

Pgim Conservative Retirement  vs.  Columbia Flexible Capital

Pgim Conservative

Risk-Adjusted Performance

0 of 100

Very Weak

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

Columbia Flexible Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Flexible Capital has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Columbia Flexible 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 Conservative and Columbia Flexible

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

The idea behind Pgim Conservative Retirement and Columbia Flexible Capital 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.