Correlation Between Pgim High and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Pgim High and Dow Jones 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 High and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pgim High Yield and Dow Jones Industrial, you can compare the effects of market volatilities on Pgim High and Dow Jones 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 High with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pgim High and Dow Jones.
Diversification Opportunities for Pgim High and Dow Jones
Very weak diversification
The 3 months correlation between Pgim and Dow is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Pgim High Yield and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Pgim High 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 High Yield are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Pgim High i.e., Pgim High and Dow Jones go up and down completely randomly.
Pair Corralation between Pgim High and Dow Jones
Considering the 90-day investment horizon Pgim High Yield is expected to generate 1.01 times more return on investment than Dow Jones. However, Pgim High is 1.01 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 1,034 in Pgim High Yield on August 25, 2024 and sell it today you would earn a total of 354.00 from holding Pgim High Yield or generate 34.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pgim High Yield vs. Dow Jones Industrial
Performance |
| Timeline |
Pgim High and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Pgim High Yield
Pair trading matchups for Pgim High
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Pgim High and Dow Jones
The main advantage of trading using opposite Pgim High and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pgim High position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Pgim High vs. Pimco Dynamic Income | Pgim High vs. Pimco Corporate Income | Pgim High vs. Cornerstone Strategic Value | Pgim High vs. Cornerstone Strategic Return |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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