Correlation Between Vident Core and PGIM ETF
Can any of the company-specific risk be diversified away by investing in both Vident Core and PGIM ETF 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 Vident Core and PGIM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vident Core Bond and PGIM ETF Trust, you can compare the effects of market volatilities on Vident Core and PGIM ETF 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 Vident Core with a short position of PGIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vident Core and PGIM ETF.
Diversification Opportunities for Vident Core and PGIM ETF
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vident and PGIM is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vident Core Bond and PGIM ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM ETF Trust and Vident Core 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 Vident Core Bond are associated (or correlated) with PGIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM ETF Trust has no effect on the direction of Vident Core i.e., Vident Core and PGIM ETF go up and down completely randomly.
Pair Corralation between Vident Core and PGIM ETF
Given the investment horizon of 90 days Vident Core is expected to generate 1.17 times less return on investment than PGIM ETF. But when comparing it to its historical volatility, Vident Core Bond is 1.04 times less risky than PGIM ETF. It trades about 0.05 of its potential returns per unit of risk. PGIM ETF Trust is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,735 in PGIM ETF Trust on November 19, 2024 and sell it today you would earn a total of 397.00 from holding PGIM ETF Trust or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vident Core Bond vs. PGIM ETF Trust
Performance |
| Timeline |
| Vident Core Bond |
| PGIM ETF Trust |
Vident Core and PGIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vident Core and PGIM ETF
The main advantage of trading using opposite Vident Core and PGIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vident Core position performs unexpectedly, PGIM ETF 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 ETF will offset losses from the drop in PGIM ETF's long position.| Vident Core vs. Vident Core Equity | Vident Core vs. Vident International Equity | Vident Core vs. Invesco Variable Rate | Vident Core vs. FlexShares Credit Scored Corporate |
| PGIM ETF vs. SSGA Active Trust | PGIM ETF vs. BlackRock Intermediate Muni | PGIM ETF vs. iShares BBB Rated | PGIM ETF vs. Xtrackers Short Duration |
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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