Correlation Between PGIM Large and Innovator
Can any of the company-specific risk be diversified away by investing in both PGIM Large and Innovator 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 Innovator 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 Innovator SP 500, you can compare the effects of market volatilities on PGIM Large and Innovator 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 Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM Large and Innovator.
Diversification Opportunities for PGIM Large and Innovator
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between PGIM and Innovator is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Large Cap Buffer and Innovator SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP 500 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 Innovator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator SP 500 has no effect on the direction of PGIM Large i.e., PGIM Large and Innovator go up and down completely randomly.
Pair Corralation between PGIM Large and Innovator
Given the investment horizon of 90 days PGIM Large Cap Buffer is expected to generate 1.97 times more return on investment than Innovator. However, PGIM Large is 1.97 times more volatile than Innovator SP 500. It trades about 0.14 of its potential returns per unit of risk. Innovator SP 500 is currently generating about 0.23 per unit of risk. If you would invest 2,683 in PGIM Large Cap Buffer on September 12, 2024 and sell it today you would earn a total of 56.00 from holding PGIM Large Cap Buffer or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PGIM Large Cap Buffer vs. Innovator SP 500
Performance |
| Timeline |
| PGIM Large Cap |
| Innovator SP 500 |
PGIM Large and Innovator Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGIM Large and Innovator
The main advantage of trading using opposite PGIM Large and Innovator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM Large position performs unexpectedly, Innovator 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 Innovator will offset losses from the drop in Innovator's long position.| PGIM Large vs. FT Vest Equity | PGIM Large vs. Northern Lights | PGIM Large vs. Dimensional International High | PGIM Large vs. JPMorgan Fundamental Data |
| Innovator vs. Innovator ETFs Trust | Innovator vs. First Trust Cboe | Innovator vs. FT Cboe Vest | Innovator vs. Innovator SP 500 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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