Correlation Between Federated Strategic and Pgim Conservative

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

By analyzing existing cross correlation between Federated Strategic Income and Pgim Conservative Retirement, you can compare the effects of market volatilities on Federated Strategic and Pgim Conservative 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 Federated Strategic with a short position of Pgim Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Strategic and Pgim Conservative.

Diversification Opportunities for Federated Strategic and Pgim Conservative

0.98

Correlation Coefficient

Federated Strategic  Pgim Conservative

Almost no diversification

The 3 months correlation between Federated and Pgim is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Federated Strategic Income and Pgim Conservative Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Conservative and Federated Strategic 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 Federated Strategic Income are associated (or correlated) with Pgim Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim Conservative has no effect on the direction of Federated Strategic i.e., Federated Strategic and Pgim Conservative go up and down completely randomly.

Pair Corralation between Federated Strategic and Pgim Conservative

Assuming the 90 days horizon Federated Strategic is expected to generate 1.23 times less return on investment than Pgim Conservative. But when comparing it to its historical volatility, Federated Strategic Income is 1.56 times less risky than Pgim Conservative. It trades about 0.28 of its potential returns per unit of risk. Pgim Conservative Retirement is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,031  in Pgim Conservative Retirement on May 3, 2025 and sell it today you would earn a total of  41.00  from holding Pgim Conservative Retirement or generate 3.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Federated Strategic Income  vs.  Pgim Conservative Retirement

Federated Strategic

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Strategic Income are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pgim Conservative

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Conservative Retirement are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pgim Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Federated Strategic and Pgim Conservative

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

The idea behind Federated Strategic Income and Pgim Conservative Retirement 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .