Correlation Between Vanguard Extended and PGIM ETF
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended 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 Vanguard Extended and PGIM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and PGIM ETF Trust, you can compare the effects of market volatilities on Vanguard Extended 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 Vanguard Extended with a short position of PGIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and PGIM ETF.
Diversification Opportunities for Vanguard Extended and PGIM ETF
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and PGIM is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market 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 Vanguard Extended 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 Extended Market 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 Vanguard Extended i.e., Vanguard Extended and PGIM ETF go up and down completely randomly.
Pair Corralation between Vanguard Extended and PGIM ETF
Considering the 90-day investment horizon Vanguard Extended Market is expected to generate 1.39 times more return on investment than PGIM ETF. However, Vanguard Extended is 1.39 times more volatile than PGIM ETF Trust. It trades about 0.41 of its potential returns per unit of risk. PGIM ETF Trust is currently generating about 0.41 per unit of risk. If you would invest 18,309 in Vanguard Extended Market on September 1, 2024 and sell it today you would earn a total of 2,193 from holding Vanguard Extended Market or generate 11.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Extended Market vs. PGIM ETF Trust
Performance |
| Timeline |
| Vanguard Extended Market |
| PGIM ETF Trust |
Vanguard Extended and PGIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and PGIM ETF
The main advantage of trading using opposite Vanguard Extended and PGIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended 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.| Vanguard Extended vs. iShares Small Cap | Vanguard Extended vs. Invesco ESG NASDAQ | Vanguard Extended vs. Invesco ESG NASDAQ | Vanguard Extended vs. BlackRock Carbon Transition |
| PGIM ETF vs. iShares Small Cap | PGIM ETF vs. Invesco ESG NASDAQ | PGIM ETF vs. Invesco ESG NASDAQ | PGIM ETF vs. BlackRock Carbon Transition |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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