Correlation Between SPACE and PGIM Rock
Can any of the company-specific risk be diversified away by investing in both SPACE and PGIM Rock 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 SPACE and PGIM Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPACE and PGIM Rock ETF, you can compare the effects of market volatilities on SPACE and PGIM Rock 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 SPACE with a short position of PGIM Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and PGIM Rock.
Diversification Opportunities for SPACE and PGIM Rock
Very poor diversification
The 3 months correlation between SPACE and PGIM is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and PGIM Rock ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Rock ETF and SPACE 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 SPACE are associated (or correlated) with PGIM Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Rock ETF has no effect on the direction of SPACE i.e., SPACE and PGIM Rock go up and down completely randomly.
Pair Corralation between SPACE and PGIM Rock
Assuming the 90 days horizon SPACE is expected to generate 548.63 times more return on investment than PGIM Rock. However, SPACE is 548.63 times more volatile than PGIM Rock ETF. It trades about 0.18 of its potential returns per unit of risk. PGIM Rock ETF is currently generating about 0.14 per unit of risk. If you would invest 0.00 in SPACE on August 30, 2024 and sell it today you would earn a total of 56.00 from holding SPACE or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 61.97% |
| Values | Daily Returns |
SPACE vs. PGIM Rock ETF
Performance |
| Timeline |
| SPACE |
| PGIM Rock ETF |
SPACE and PGIM Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPACE and PGIM Rock
The main advantage of trading using opposite SPACE and PGIM Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE position performs unexpectedly, PGIM Rock 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 Rock will offset losses from the drop in PGIM Rock's long position.The idea behind SPACE and PGIM Rock ETF 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 Rock vs. ABIVAX Socit Anonyme | PGIM Rock vs. Pinnacle Sherman Multi Strategy | PGIM Rock vs. Morningstar Unconstrained Allocation | PGIM Rock vs. SPACE |
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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