Correlation Between Vanguard Growth and PGIM Active
Can any of the company-specific risk be diversified away by investing in both Vanguard Growth 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 Vanguard Growth and PGIM Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Growth Index and PGIM Active High, you can compare the effects of market volatilities on Vanguard Growth 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 Vanguard Growth with a short position of PGIM Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and PGIM Active.
Diversification Opportunities for Vanguard Growth and PGIM Active
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and PGIM is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index 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 Vanguard Growth 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 Vanguard Growth Index 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 Vanguard Growth i.e., Vanguard Growth and PGIM Active go up and down completely randomly.
Pair Corralation between Vanguard Growth and PGIM Active
Considering the 90-day investment horizon Vanguard Growth is expected to generate 1.94 times less return on investment than PGIM Active. In addition to that, Vanguard Growth is 4.68 times more volatile than PGIM Active High. It trades about 0.04 of its total potential returns per unit of risk. PGIM Active High is currently generating about 0.34 per unit of volatility. If you would invest 3,451 in PGIM Active High on October 20, 2024 and sell it today you would earn a total of 60.00 from holding PGIM Active High or generate 1.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Growth Index vs. PGIM Active High
Performance |
| Timeline |
| Vanguard Growth Index |
| PGIM Active High |
Vanguard Growth and PGIM Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and PGIM Active
The main advantage of trading using opposite Vanguard Growth and PGIM Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth 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.| Vanguard Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Information Technology | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard Dividend Appreciation |
| 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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