Correlation Between IShares 1 and PGIM Short
Can any of the company-specific risk be diversified away by investing in both IShares 1 and PGIM Short 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 IShares 1 and PGIM Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares 1 5 Year and PGIM Short Duration, you can compare the effects of market volatilities on IShares 1 and PGIM Short 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 IShares 1 with a short position of PGIM Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 1 and PGIM Short.
Diversification Opportunities for IShares 1 and PGIM Short
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and PGIM is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 5 Year and PGIM Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Short Duration and IShares 1 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 iShares 1 5 Year are associated (or correlated) with PGIM Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Short Duration has no effect on the direction of IShares 1 i.e., IShares 1 and PGIM Short go up and down completely randomly.
Pair Corralation between IShares 1 and PGIM Short
Given the investment horizon of 90 days iShares 1 5 Year is expected to generate 0.99 times more return on investment than PGIM Short. However, iShares 1 5 Year is 1.01 times less risky than PGIM Short. It trades about 0.19 of its potential returns per unit of risk. PGIM Short Duration is currently generating about 0.15 per unit of risk. If you would invest 5,182 in iShares 1 5 Year on September 1, 2024 and sell it today you would earn a total of 33.00 from holding iShares 1 5 Year or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 1 5 Year vs. PGIM Short Duration
Performance |
| Timeline |
| iShares 1 5 |
| PGIM Short Duration |
IShares 1 and PGIM Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 1 and PGIM Short
The main advantage of trading using opposite IShares 1 and PGIM Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 1 position performs unexpectedly, PGIM Short 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 Short will offset losses from the drop in PGIM Short's long position.| IShares 1 vs. iShares 5 10 Year | IShares 1 vs. iShares 0 5 Year | IShares 1 vs. SPDR Barclays Short | IShares 1 vs. iShares Core Total |
| PGIM Short vs. Vanguard Intermediate Term Corporate | PGIM Short vs. Vanguard Short Term Bond | PGIM Short vs. Vanguard Long Term Corporate | PGIM Short vs. Vanguard Short Term Treasury |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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