Correlation Between GM and PGIM ETF
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and PGIM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and PGIM ETF Trust, you can compare the effects of market volatilities on GM 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 GM with a short position of PGIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PGIM ETF.
Diversification Opportunities for GM and PGIM ETF
Pay attention - limited upside
The 3 months correlation between GM and PGIM is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and PGIM ETF go up and down completely randomly.
Pair Corralation between GM and PGIM ETF
Allowing for the 90-day total investment horizon General Motors is expected to generate 5.47 times more return on investment than PGIM ETF. However, GM is 5.47 times more volatile than PGIM ETF Trust. It trades about 0.15 of its potential returns per unit of risk. PGIM ETF Trust is currently generating about 0.11 per unit of risk. If you would invest 2,789 in General Motors on August 26, 2024 and sell it today you would earn a total of 3,064 from holding General Motors or generate 109.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. PGIM ETF Trust
Performance |
| Timeline |
| General Motors |
| PGIM ETF Trust |
GM and PGIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and PGIM ETF
The main advantage of trading using opposite GM and PGIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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.The idea behind General Motors and PGIM ETF Trust 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.| PGIM ETF vs. iShares MSCI EAFE | PGIM ETF vs. iShares iBoxx Investment | PGIM ETF vs. iShares TIPS Bond | PGIM ETF vs. iShares 1 3 Year |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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