Correlation Between Western Asset and Pgim High
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Pgim High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Pgim High Yield, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Pgim High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Pgim High.
Diversification Opportunities for Western Asset and Pgim High
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Pgim is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High 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 Western Asset 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 Western Asset High 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 Western Asset i.e., Western Asset and Pgim High go up and down completely randomly.
Pair Corralation between Western Asset and Pgim High
Considering the 90-day investment horizon Western Asset High is expected to generate 1.18 times more return on investment than Pgim High. However, Western Asset is 1.18 times more volatile than Pgim High Yield. It trades about 0.17 of its potential returns per unit of risk. Pgim High Yield is currently generating about 0.2 per unit of risk. If you would invest 436.00 in Western Asset High on September 13, 2024 and sell it today you would earn a total of 12.00 from holding Western Asset High or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Pgim High Yield
Performance |
| Timeline |
| Western Asset High |
| Pgim High Yield |
Western Asset and Pgim High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Pgim High
The main advantage of trading using opposite Western Asset and Pgim High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Western Asset High | Western Asset vs. Western Asset High | Western Asset vs. Blackrock Debt Strategies | Western Asset vs. Western Asset Diversified |
| Pgim High vs. Western Asset High | Pgim High vs. Western Asset High | Pgim High vs. Blackrock Debt Strategies | Pgim High vs. Western Asset Diversified |
Check out your portfolio center.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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