Correlation Between ClearShares OCIO and PGIM ETF

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

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

Diversification Opportunities for ClearShares OCIO and PGIM ETF

0.96

Correlation Coefficient

ClearShares OCIO  PGIM ETF

Almost no diversification

The 3 months correlation between ClearShares and PGIM is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding ClearShares OCIO ETF 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 ClearShares OCIO 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 ClearShares OCIO ETF 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 ClearShares OCIO i.e., ClearShares OCIO and PGIM ETF go up and down completely randomly.

Pair Corralation between ClearShares OCIO and PGIM ETF

Given the investment horizon of 90 days ClearShares OCIO is expected to generate 1.36 times less return on investment than PGIM ETF. In addition to that, ClearShares OCIO is 1.05 times more volatile than PGIM ETF Trust. It trades about 0.15 of its total potential returns per unit of risk. PGIM ETF Trust is currently generating about 0.21 per unit of volatility. If you would invest  2,874  in PGIM ETF Trust on September 2, 2024 and sell it today you would earn a total of  204.00  from holding PGIM ETF Trust or generate 7.1% return on investment over 90 days.

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

ClearShares OCIO ETF  vs.  PGIM ETF Trust

ClearShares OCIO ETF

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ClearShares OCIO ETF are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, ClearShares OCIO is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

PGIM ETF Trust

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM ETF Trust are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, PGIM ETF may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ClearShares OCIO and PGIM ETF

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

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.