Correlation Between IShares Broad and PGIM Active
Can any of the company-specific risk be diversified away by investing in both IShares Broad 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 IShares Broad and PGIM Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Broad USD and PGIM Active High, you can compare the effects of market volatilities on IShares Broad 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 IShares Broad with a short position of PGIM Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Broad and PGIM Active.
Diversification Opportunities for IShares Broad and PGIM Active
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and PGIM is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Broad USD 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 IShares Broad 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 iShares Broad USD 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 IShares Broad i.e., IShares Broad and PGIM Active go up and down completely randomly.
Pair Corralation between IShares Broad and PGIM Active
Given the investment horizon of 90 days iShares Broad USD is expected to generate 1.15 times more return on investment than PGIM Active. However, IShares Broad is 1.15 times more volatile than PGIM Active High. It trades about 0.3 of its potential returns per unit of risk. PGIM Active High is currently generating about 0.34 per unit of risk. If you would invest 3,654 in iShares Broad USD on October 20, 2024 and sell it today you would earn a total of 65.00 from holding iShares Broad USD or generate 1.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Broad USD vs. PGIM Active High
Performance |
| Timeline |
| iShares Broad USD |
| PGIM Active High |
IShares Broad and PGIM Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Broad and PGIM Active
The main advantage of trading using opposite IShares Broad and PGIM Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Broad 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.| IShares Broad vs. Xtrackers USD High | IShares Broad vs. iShares 0 5 Year | IShares Broad vs. iShares Broad USD | IShares Broad vs. Global X Preferred |
| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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