Correlation Between Pgim Securitized and California High-yield

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

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

Diversification Opportunities for Pgim Securitized and California High-yield

-0.18

Correlation Coefficient

Pgim Securitized  California High-yield

Good diversification

The 3 months correlation between Pgim and California is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Securitized Credit and California High Yield Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California High Yield and Pgim Securitized 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 Securitized Credit are associated (or correlated) with California High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California High Yield has no effect on the direction of Pgim Securitized i.e., Pgim Securitized and California High-yield go up and down completely randomly.

Pair Corralation between Pgim Securitized and California High-yield

Assuming the 90 days horizon Pgim Securitized is expected to generate 1.11 times less return on investment than California High-yield. But when comparing it to its historical volatility, Pgim Securitized Credit is 2.32 times less risky than California High-yield. It trades about 0.27 of its potential returns per unit of risk. California High Yield Municipal is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  877.00  in California High Yield Municipal on October 5, 2024 and sell it today you would earn a total of  101.00  from holding California High Yield Municipal or generate 11.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

Pgim Securitized Credit  vs.  California High Yield Municipa

Pgim Securitized Credit

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Securitized Credit are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pgim Securitized is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

California High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days California High Yield Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, California High-yield 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 Securitized and California High-yield

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

The idea behind Pgim Securitized Credit and California High Yield Municipal 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.