Correlation Between IShares BBB and PGIM ETF
Can any of the company-specific risk be diversified away by investing in both IShares BBB 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 IShares BBB and PGIM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares BBB Rated and PGIM ETF Trust, you can compare the effects of market volatilities on IShares BBB 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 IShares BBB with a short position of PGIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares BBB and PGIM ETF.
Diversification Opportunities for IShares BBB and PGIM ETF
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and PGIM is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares BBB Rated 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 IShares BBB 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 BBB Rated 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 IShares BBB i.e., IShares BBB and PGIM ETF go up and down completely randomly.
Pair Corralation between IShares BBB and PGIM ETF
Given the investment horizon of 90 days iShares BBB Rated is expected to generate 1.16 times more return on investment than PGIM ETF. However, IShares BBB is 1.16 times more volatile than PGIM ETF Trust. It trades about 0.1 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 8,606 in iShares BBB Rated on August 30, 2024 and sell it today you would earn a total of 83.00 from holding iShares BBB Rated or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares BBB Rated vs. PGIM ETF Trust
Performance |
| Timeline |
| iShares BBB Rated |
| PGIM ETF Trust |
IShares BBB and PGIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares BBB and PGIM ETF
The main advantage of trading using opposite IShares BBB and PGIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares BBB 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.| IShares BBB vs. iShares BB Rated | IShares BBB vs. iShares Aaa | IShares BBB vs. iShares Edge Investment | IShares BBB vs. BlackRock Intermediate Muni |
| PGIM ETF vs. SSGA Active Trust | PGIM ETF vs. BlackRock Intermediate Muni | PGIM ETF vs. iShares BBB Rated | PGIM ETF vs. Xtrackers Short Duration |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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