Correlation Between Prudential Core and Pgim High

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

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

Diversification Opportunities for Prudential Core and Pgim High

0.02

Correlation Coefficient

Prudential Core  Pgim High

Significant diversification

The 3 months correlation between Prudential and Pgim is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Core Conservative and Pgim High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim High Yield and Prudential Core 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 Core Conservative are associated (or correlated) with Pgim High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim High Yield has no effect on the direction of Prudential Core i.e., Prudential Core and Pgim High go up and down completely randomly.

Pair Corralation between Prudential Core and Pgim High

Assuming the 90 days horizon Prudential Core Conservative is expected to under-perform the Pgim High. In addition to that, Prudential Core is 1.93 times more volatile than Pgim High Yield. It trades about -0.1 of its total potential returns per unit of risk. Pgim High Yield is currently generating about 0.08 per unit of volatility. If you would invest  480.00  in Pgim High Yield on September 13, 2024 and sell it today you would earn a total of  4.00  from holding Pgim High Yield or generate 0.83% return on investment over 90 days.

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

Prudential Core Conservative  vs.  Pgim High Yield

Prudential Core Cons

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pgim High Yield

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim High Yield are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Pgim High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prudential Core and Pgim High

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

The idea behind Prudential Core Conservative and Pgim High Yield 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.