Correlation Between Pgim High and Investec Emerging
Can any of the company-specific risk be diversified away by investing in both Pgim High and Investec Emerging 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 Investec Emerging 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 Investec Emerging Markets, you can compare the effects of market volatilities on Pgim High and Investec Emerging 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 Investec Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pgim High and Investec Emerging.
Diversification Opportunities for Pgim High and Investec Emerging
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pgim and Investec is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pgim High Yield and Investec Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Emerging Markets 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 Investec Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Emerging Markets has no effect on the direction of Pgim High i.e., Pgim High and Investec Emerging go up and down completely randomly.
Pair Corralation between Pgim High and Investec Emerging
Assuming the 90 days horizon Pgim High is expected to generate 1.16 times less return on investment than Investec Emerging. But when comparing it to its historical volatility, Pgim High Yield is 3.19 times less risky than Investec Emerging. It trades about 0.15 of its potential returns per unit of risk. Investec Emerging Markets is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 909.00 in Investec Emerging Markets on August 31, 2024 and sell it today you would earn a total of 163.00 from holding Investec Emerging Markets or generate 17.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pgim High Yield vs. Investec Emerging Markets
Performance |
| Timeline |
| Pgim High Yield |
| Investec Emerging Markets |
Pgim High and Investec Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pgim High and Investec Emerging
The main advantage of trading using opposite Pgim High and Investec Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pgim High position performs unexpectedly, Investec Emerging 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 Investec Emerging will offset losses from the drop in Investec Emerging's long position.| Pgim High vs. Investec Emerging Markets | Pgim High vs. Transamerica Emerging Markets | Pgim High vs. Dws Emerging Markets | Pgim High vs. Siit Emerging Markets |
| Investec Emerging vs. Tax Managed Large Cap | Investec Emerging vs. Federated Kaufmann Large | Investec Emerging vs. Pace Large Growth | Investec Emerging vs. Aqr Large Cap |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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