Correlation Between Federated Mdt and Pgim High

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

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

Diversification Opportunities for Federated Mdt and Pgim High

0.3

Correlation Coefficient

Federated Mdt  Pgim High

Weak diversification

The 3 months correlation between Federated and Pgim is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Federated Mdt All 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 Federated Mdt 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 Federated Mdt All 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 Federated Mdt i.e., Federated Mdt and Pgim High go up and down completely randomly.

Pair Corralation between Federated Mdt and Pgim High

Assuming the 90 days horizon Federated Mdt All is expected to under-perform the Pgim High. In addition to that, Federated Mdt is 1.59 times more volatile than Pgim High Yield. It trades about -0.03 of its total potential returns per unit of risk. Pgim High Yield is currently generating about 0.02 per unit of volatility. If you would invest  1,369  in Pgim High Yield on October 8, 2024 and sell it today you would earn a total of  9.00  from holding Pgim High Yield or generate 0.66% return on investment over 90 days.

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

Federated Mdt All  vs.  Pgim High Yield

Federated Mdt All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Mdt All has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Federated Mdt 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

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim High Yield are ranked lower than 1 (%) 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.

Pair Trading with Federated Mdt and Pgim High

The main advantage of trading using opposite Federated Mdt and Pgim High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Mdt 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 Federated Mdt All 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.