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

0.57

Correlation Coefficient

Western Asset  Pgim High

Very weak diversification

The 3 months correlation between Western and PGIM is 0.57. 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 under-perform the Pgim High. But the etf apears to be less risky and, when comparing its historical volatility, Western Asset High is 1.27 times less risky than Pgim High. The etf trades about -0.01 of its potential returns per unit of risk. The Pgim High Yield is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,369  in Pgim High Yield on September 5, 2024 and sell it today you would earn a total of  47.00  from holding Pgim High Yield or generate 3.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Western Asset High  vs.  Pgim High Yield

Western Asset High

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset High are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Western Asset is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pgim High Yield

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim High Yield are ranked lower than 7 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

The idea behind Western Asset High 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..