Correlation Between PGIM Large and AIM ETF

Can any of the company-specific risk be diversified away by investing in both PGIM Large and AIM 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 PGIM Large and AIM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PGIM Large Cap Buffer and AIM ETF Products, you can compare the effects of market volatilities on PGIM Large and AIM 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 PGIM Large with a short position of AIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM Large and AIM ETF.

Diversification Opportunities for PGIM Large and AIM ETF

0.94

Correlation Coefficient

PGIM Large  AIM ETF

Almost no diversification

The 3 months correlation between PGIM and AIM is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Large Cap Buffer and AIM ETF Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ETF Products and PGIM Large 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 PGIM Large Cap Buffer are associated (or correlated) with AIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ETF Products has no effect on the direction of PGIM Large i.e., PGIM Large and AIM ETF go up and down completely randomly.

Pair Corralation between PGIM Large and AIM ETF

Given the investment horizon of 90 days PGIM Large Cap Buffer is expected to generate 1.25 times more return on investment than AIM ETF. However, PGIM Large is 1.25 times more volatile than AIM ETF Products. It trades about 0.17 of its potential returns per unit of risk. AIM ETF Products is currently generating about 0.14 per unit of risk. If you would invest  2,497  in PGIM Large Cap Buffer on October 22, 2024 and sell it today you would earn a total of  319.50  from holding PGIM Large Cap Buffer or generate 12.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	79.39%
Values	Daily Returns

PGIM Large Cap Buffer  vs.  AIM ETF Products

PGIM Large Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Large Cap Buffer are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, PGIM Large is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

AIM ETF Products

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AIM ETF Products are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, AIM ETF is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PGIM Large and AIM ETF

The main advantage of trading using opposite PGIM Large and AIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM Large position performs unexpectedly, AIM 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 AIM ETF will offset losses from the drop in AIM ETF's long position.

The idea behind PGIM Large Cap Buffer and AIM ETF Products 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.

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