Correlation Between PGIM ETF and Dow Jones
Can any of the company-specific risk be diversified away by investing in both PGIM ETF and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on PGIM ETF and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM ETF and Dow Jones.
Diversification Opportunities for PGIM ETF and Dow Jones
Very weak diversification
The 3 months correlation between PGIM and Dow is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding PGIM ETF Trust and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of PGIM ETF i.e., PGIM ETF and Dow Jones go up and down completely randomly.
Pair Corralation between PGIM ETF and Dow Jones
Given the investment horizon of 90 days PGIM ETF Trust is expected to generate 1.71 times more return on investment than Dow Jones. However, PGIM ETF is 1.71 times more volatile than Dow Jones Industrial. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 5,063 in PGIM ETF Trust on August 27, 2024 and sell it today you would earn a total of 1,057 from holding PGIM ETF Trust or generate 20.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 47.58% |
| Values | Daily Returns |
PGIM ETF Trust vs. Dow Jones Industrial
Performance |
| Timeline |
PGIM ETF and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
PGIM ETF Trust
Pair trading matchups for PGIM ETF
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with PGIM ETF and Dow Jones
The main advantage of trading using opposite PGIM ETF and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM ETF position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| PGIM ETF vs. iShares Dividend and | PGIM ETF vs. Martin Currie Sustainable | PGIM ETF vs. VictoryShares THB Mid | PGIM ETF vs. Mast Global Battery |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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