Correlation Between Vanguard Total and PGIM ETF
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and PGIM ETF 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 Vanguard Total and PGIM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Bond and PGIM ETF Trust, you can compare the effects of market volatilities on Vanguard Total and PGIM ETF 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 Vanguard Total with a short position of PGIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and PGIM ETF.
Diversification Opportunities for Vanguard Total and PGIM ETF
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vanguard and PGIM is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and PGIM ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM ETF Trust and Vanguard Total 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 Vanguard Total Bond are associated (or correlated) with PGIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM ETF Trust has no effect on the direction of Vanguard Total i.e., Vanguard Total and PGIM ETF go up and down completely randomly.
Pair Corralation between Vanguard Total and PGIM ETF
Considering the 90-day investment horizon Vanguard Total is expected to generate 16.06 times less return on investment than PGIM ETF. But when comparing it to its historical volatility, Vanguard Total Bond is 21.69 times less risky than PGIM ETF. It trades about 0.03 of its potential returns per unit of risk. PGIM ETF Trust is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9,893 in PGIM ETF Trust on August 29, 2024 and sell it today you would lose (4,758) from holding PGIM ETF Trust or give up 48.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 93.35% |
| Values | Daily Returns |
Vanguard Total Bond vs. PGIM ETF Trust
Performance |
| Timeline |
| Vanguard Total Bond |
| PGIM ETF Trust |
Vanguard Total and PGIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and PGIM ETF
The main advantage of trading using opposite Vanguard Total and PGIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, PGIM ETF 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 ETF will offset losses from the drop in PGIM ETF's long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Real Estate |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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