Correlation Between Pacer Trendpilot and PGIM Active
Can any of the company-specific risk be diversified away by investing in both Pacer Trendpilot and PGIM Active 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 Pacer Trendpilot and PGIM Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Trendpilot 100 and PGIM Active High, you can compare the effects of market volatilities on Pacer Trendpilot and PGIM Active 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 Pacer Trendpilot with a short position of PGIM Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Trendpilot and PGIM Active.
Diversification Opportunities for Pacer Trendpilot and PGIM Active
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pacer and PGIM is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Trendpilot 100 and PGIM Active High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Active High and Pacer Trendpilot 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 Pacer Trendpilot 100 are associated (or correlated) with PGIM Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Active High has no effect on the direction of Pacer Trendpilot i.e., Pacer Trendpilot and PGIM Active go up and down completely randomly.
Pair Corralation between Pacer Trendpilot and PGIM Active
Given the investment horizon of 90 days Pacer Trendpilot 100 is expected to generate 2.85 times more return on investment than PGIM Active. However, Pacer Trendpilot is 2.85 times more volatile than PGIM Active High. It trades about 0.12 of its potential returns per unit of risk. PGIM Active High is currently generating about 0.15 per unit of risk. If you would invest 6,962 in Pacer Trendpilot 100 on November 2, 2024 and sell it today you would earn a total of 549.00 from holding Pacer Trendpilot 100 or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Trendpilot 100 vs. PGIM Active High
Performance |
| Timeline |
| Pacer Trendpilot 100 |
| PGIM Active High |
Pacer Trendpilot and PGIM Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Trendpilot and PGIM Active
The main advantage of trading using opposite Pacer Trendpilot and PGIM Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Trendpilot position performs unexpectedly, PGIM Active 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 PGIM Active will offset losses from the drop in PGIM Active's long position.| Pacer Trendpilot vs. Pacer Trendpilot Large | Pacer Trendpilot vs. Pacer Trendpilot Mid | Pacer Trendpilot vs. Pacer Trendpilot European | Pacer Trendpilot vs. Nuveen ESG Large Cap |
| PGIM Active vs. Xtrackers High Beta | PGIM Active vs. Xtrackers Short Duration | PGIM Active vs. FlexShares High Yield | PGIM Active vs. Franklin Liberty High |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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