Correlation Between PGIM ETF and Franklin Templeton

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Can any of the company-specific risk be diversified away by investing in both PGIM ETF and Franklin Templeton 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 Franklin Templeton 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 Franklin Templeton ETF, you can compare the effects of market volatilities on PGIM ETF and Franklin Templeton 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 Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM ETF and Franklin Templeton.

Diversification Opportunities for PGIM ETF and Franklin Templeton

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between PGIM and Franklin is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding PGIM ETF Trust and Franklin Templeton ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton ETF 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 Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton ETF has no effect on the direction of PGIM ETF i.e., PGIM ETF and Franklin Templeton go up and down completely randomly.

Pair Corralation between PGIM ETF and Franklin Templeton

Given the investment horizon of 90 days PGIM ETF Trust is expected to under-perform the Franklin Templeton. But the etf apears to be less risky and, when comparing its historical volatility, PGIM ETF Trust is 1.47 times less risky than Franklin Templeton. The etf trades about -0.01 of its potential returns per unit of risk. The Franklin Templeton ETF is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,336  in Franklin Templeton ETF on August 30, 2024 and sell it today you would earn a total of  319.00  from holding Franklin Templeton ETF or generate 5.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy97.73%
ValuesDaily Returns

PGIM ETF Trust  vs.  Franklin Templeton ETF

 Performance 
       Timeline  
PGIM ETF Trust 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PGIM ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, PGIM ETF is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
Franklin Templeton ETF 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Templeton ETF are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Franklin Templeton may actually be approaching a critical reversion point that can send shares even higher in December 2024.

PGIM ETF and Franklin Templeton Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PGIM ETF and Franklin Templeton

The main advantage of trading using opposite PGIM ETF and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM ETF position performs unexpectedly, Franklin Templeton 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 Franklin Templeton will offset losses from the drop in Franklin Templeton's long position.
The idea behind PGIM ETF Trust and Franklin Templeton ETF 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.
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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