Correlation Between PGIM ETF and Freedom Day
Can any of the company-specific risk be diversified away by investing in both PGIM ETF and Freedom Day 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 Freedom Day 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 Freedom Day Dividend, you can compare the effects of market volatilities on PGIM ETF and Freedom Day 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 Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM ETF and Freedom Day.
Diversification Opportunities for PGIM ETF and Freedom Day
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PGIM and Freedom is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding PGIM ETF Trust and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend 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 Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of PGIM ETF i.e., PGIM ETF and Freedom Day go up and down completely randomly.
Pair Corralation between PGIM ETF and Freedom Day
Given the investment horizon of 90 days PGIM ETF is expected to generate 1.9 times less return on investment than Freedom Day. In addition to that, PGIM ETF is 1.49 times more volatile than Freedom Day Dividend. It trades about 0.04 of its total potential returns per unit of risk. Freedom Day Dividend is currently generating about 0.11 per unit of volatility. If you would invest 3,126 in Freedom Day Dividend on August 30, 2024 and sell it today you would earn a total of 389.00 from holding Freedom Day Dividend or generate 12.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PGIM ETF Trust vs. Freedom Day Dividend
Performance |
| Timeline |
| PGIM ETF Trust |
| Freedom Day Dividend |
PGIM ETF and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGIM ETF and Freedom Day
The main advantage of trading using opposite PGIM ETF and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM ETF position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day's long position.| PGIM ETF vs. Freedom Day Dividend | PGIM ETF vs. Franklin Templeton ETF | PGIM ETF vs. iShares MSCI China | PGIM ETF vs. Tidal Trust II |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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