Correlation Between NYSE Composite and PGIM ETF
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and PGIM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and PGIM ETF Trust, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of PGIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and PGIM ETF.
Diversification Opportunities for NYSE Composite and PGIM ETF
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and PGIM is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and PGIM ETF go up and down completely randomly.
Pair Corralation between NYSE Composite and PGIM ETF
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.82 times more return on investment than PGIM ETF. However, NYSE Composite is 1.82 times more volatile than PGIM ETF Trust. It trades about 0.08 of its potential returns per unit of risk. PGIM ETF Trust is currently generating about 0.05 per unit of risk. If you would invest 1,542,897 in NYSE Composite on November 19, 2024 and sell it today you would earn a total of 470,152 from holding NYSE Composite or generate 30.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NYSE Composite vs. PGIM ETF Trust
Performance |
| Timeline |
NYSE Composite and PGIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
PGIM ETF Trust
Pair trading matchups for PGIM ETF
Pair Trading with NYSE Composite and PGIM ETF
The main advantage of trading using opposite NYSE Composite and PGIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Regeneron Pharmaceuticals | NYSE Composite vs. Compania Cervecerias Unidas | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Monster Beverage Corp |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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