Correlation Between IShares Core and PGIM ETF

Can any of the company-specific risk be diversified away by investing in both IShares 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 IShares 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 iShares Core Growth and PGIM ETF Trust, you can compare the effects of market volatilities on IShares 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 IShares Core with a short position of PGIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and PGIM ETF.

Diversification Opportunities for IShares Core and PGIM ETF

0.59

Correlation Coefficient

IShares Core  PGIM ETF

Very weak diversification

The 3 months correlation between IShares and PGIM is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Growth 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 IShares 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 iShares Core Growth 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 IShares Core i.e., IShares Core and PGIM ETF go up and down completely randomly.

Pair Corralation between IShares Core and PGIM ETF

Considering the 90-day investment horizon iShares Core Growth is expected to generate 0.86 times more return on investment than PGIM ETF. However, iShares Core Growth is 1.17 times less risky than PGIM ETF. It trades about 0.03 of its potential returns per unit of risk. PGIM ETF Trust is currently generating about -0.07 per unit of risk. If you would invest  5,768  in iShares Core Growth on December 27, 2024 and sell it today you would earn a total of  51.00  from holding iShares Core Growth or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

iShares Core Growth  vs.  PGIM ETF Trust

iShares Core Growth

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Growth are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

PGIM ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days PGIM ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, PGIM ETF is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IShares Core and PGIM ETF

The main advantage of trading using opposite IShares Core and PGIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 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.

The idea behind iShares Core Growth and PGIM ETF Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.