Correlation Between PGIM ETF and Pacer Pacific
Can any of the company-specific risk be diversified away by investing in both PGIM ETF and Pacer Pacific 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 Pacer Pacific 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 Pacer Pacific Asset, you can compare the effects of market volatilities on PGIM ETF and Pacer Pacific 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 Pacer Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM ETF and Pacer Pacific.
Diversification Opportunities for PGIM ETF and Pacer Pacific
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PGIM and Pacer is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding PGIM ETF Trust and Pacer Pacific Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Pacific Asset 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 Pacer Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Pacific Asset has no effect on the direction of PGIM ETF i.e., PGIM ETF and Pacer Pacific go up and down completely randomly.
Pair Corralation between PGIM ETF and Pacer Pacific
Given the investment horizon of 90 days PGIM ETF Trust is expected to generate 1.39 times more return on investment than Pacer Pacific. However, PGIM ETF is 1.39 times more volatile than Pacer Pacific Asset. It trades about 0.32 of its potential returns per unit of risk. Pacer Pacific Asset is currently generating about 0.39 per unit of risk. If you would invest 4,590 in PGIM ETF Trust on August 27, 2024 and sell it today you would earn a total of 511.00 from holding PGIM ETF Trust or generate 11.13% 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. Pacer Pacific Asset
Performance |
| Timeline |
| PGIM ETF Trust |
| Pacer Pacific Asset |
PGIM ETF and Pacer Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGIM ETF and Pacer Pacific
The main advantage of trading using opposite PGIM ETF and Pacer Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM ETF position performs unexpectedly, Pacer Pacific 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 Pacer Pacific will offset losses from the drop in Pacer Pacific's long position.| PGIM ETF vs. Franklin Liberty Short | PGIM ETF vs. SPDR Bloomberg Investment | PGIM ETF vs. VanEck Investment Grade |
| Pacer Pacific vs. Franklin Liberty Short | Pacer Pacific vs. SPDR Bloomberg Investment | Pacer Pacific vs. VanEck Investment Grade |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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