Correlation Between PGIM Large and Dimensional International
Can any of the company-specific risk be diversified away by investing in both PGIM Large and Dimensional International 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 PGIM Large and Dimensional International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGIM Large Cap Buffer and Dimensional International High, you can compare the effects of market volatilities on PGIM Large and Dimensional International 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 PGIM Large with a short position of Dimensional International. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM Large and Dimensional International.
Diversification Opportunities for PGIM Large and Dimensional International
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PGIM and Dimensional is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Large Cap Buffer and Dimensional International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International and PGIM Large 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 PGIM Large Cap Buffer are associated (or correlated) with Dimensional International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of PGIM Large i.e., PGIM Large and Dimensional International go up and down completely randomly.
Pair Corralation between PGIM Large and Dimensional International
Given the investment horizon of 90 days PGIM Large Cap Buffer is expected to generate 0.49 times more return on investment than Dimensional International. However, PGIM Large Cap Buffer is 2.03 times less risky than Dimensional International. It trades about 0.19 of its potential returns per unit of risk. Dimensional International High is currently generating about 0.05 per unit of risk. If you would invest 2,497 in PGIM Large Cap Buffer on August 30, 2024 and sell it today you would earn a total of 294.00 from holding PGIM Large Cap Buffer or generate 11.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 29.7% |
| Values | Daily Returns |
PGIM Large Cap Buffer vs. Dimensional International High
Performance |
| Timeline |
| PGIM Large Cap |
| Dimensional International |
PGIM Large and Dimensional International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGIM Large and Dimensional International
The main advantage of trading using opposite PGIM Large and Dimensional International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM Large position performs unexpectedly, Dimensional International 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 Dimensional International will offset losses from the drop in Dimensional International's long position.| PGIM Large vs. FT Vest Equity | PGIM Large vs. Northern Lights | PGIM Large vs. Dimensional International High | PGIM Large vs. First Trust Exchange Traded |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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