Correlation Between PGIM Large and Xtrackers High
Can any of the company-specific risk be diversified away by investing in both PGIM Large and Xtrackers 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 PGIM Large and Xtrackers High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGIM Large Cap Buffer and Xtrackers High Beta, you can compare the effects of market volatilities on PGIM Large and Xtrackers 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 PGIM Large with a short position of Xtrackers High. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM Large and Xtrackers High.
Diversification Opportunities for PGIM Large and Xtrackers High
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PGIM and Xtrackers is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Large Cap Buffer and Xtrackers High Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers High Beta and PGIM Large 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 Large Cap Buffer are associated (or correlated) with Xtrackers High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers High Beta has no effect on the direction of PGIM Large i.e., PGIM Large and Xtrackers High go up and down completely randomly.
Pair Corralation between PGIM Large and Xtrackers High
Given the investment horizon of 90 days PGIM Large Cap Buffer is expected to generate 1.65 times more return on investment than Xtrackers High. However, PGIM Large is 1.65 times more volatile than Xtrackers High Beta. It trades about 0.15 of its potential returns per unit of risk. Xtrackers High Beta is currently generating about 0.2 per unit of risk. If you would invest 2,587 in PGIM Large Cap Buffer on November 2, 2024 and sell it today you would earn a total of 173.24 from holding PGIM Large Cap Buffer or generate 6.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.04% |
| Values | Daily Returns |
PGIM Large Cap Buffer vs. Xtrackers High Beta
Performance |
| Timeline |
| PGIM Large Cap |
| Xtrackers High Beta |
PGIM Large and Xtrackers High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGIM Large and Xtrackers High
The main advantage of trading using opposite PGIM Large and Xtrackers High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM Large position performs unexpectedly, Xtrackers 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 Xtrackers High will offset losses from the drop in Xtrackers High's long position.| PGIM Large vs. FT Vest Equity | PGIM Large vs. Northern Lights | PGIM Large vs. Dimensional International High | PGIM Large vs. First Trust Exchange Traded |
| Xtrackers High vs. Xtrackers Short Duration | Xtrackers High vs. FlexShares High Yield | Xtrackers High vs. Xtrackers Low Beta | Xtrackers High vs. iShares Edge High |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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