Correlation Between PGIM ETF and VanEck ETF
Can any of the company-specific risk be diversified away by investing in both PGIM ETF and VanEck 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 PGIM ETF and VanEck ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGIM ETF Trust and VanEck ETF Trust, you can compare the effects of market volatilities on PGIM ETF and VanEck 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 PGIM ETF with a short position of VanEck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM ETF and VanEck ETF.
Diversification Opportunities for PGIM ETF and VanEck ETF
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between PGIM and VanEck is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding PGIM ETF Trust and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF Trust and PGIM ETF 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 ETF Trust are associated (or correlated) with VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of PGIM ETF i.e., PGIM ETF and VanEck ETF go up and down completely randomly.
Pair Corralation between PGIM ETF and VanEck ETF
Given the investment horizon of 90 days PGIM ETF Trust is expected to generate 2.81 times more return on investment than VanEck ETF. However, PGIM ETF is 2.81 times more volatile than VanEck ETF Trust. It trades about 0.44 of its potential returns per unit of risk. VanEck ETF Trust is currently generating about 0.68 per unit of risk. If you would invest 5,038 in PGIM ETF Trust on September 1, 2024 and sell it today you would earn a total of 61.00 from holding PGIM ETF Trust or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PGIM ETF Trust vs. VanEck ETF Trust
Performance |
| Timeline |
| PGIM ETF Trust |
| VanEck ETF Trust |
PGIM ETF and VanEck ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGIM ETF and VanEck ETF
The main advantage of trading using opposite PGIM ETF and VanEck ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM ETF position performs unexpectedly, VanEck 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 VanEck ETF will offset losses from the drop in VanEck ETF's long position.The idea behind PGIM ETF Trust and VanEck ETF Trust 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.| VanEck ETF vs. iShares Interest Rate | VanEck ETF vs. iShares Interest Rate | VanEck ETF vs. iShares Edge Investment | VanEck ETF vs. iShares Inflation Hedged |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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