Correlation Between PGIM ETF and ETF Opportunities

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

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

Diversification Opportunities for PGIM ETF and ETF Opportunities

0.85

Correlation Coefficient

PGIM ETF  ETF Opportunities

Very poor diversification

The 3 months correlation between PGIM and ETF is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding PGIM ETF Trust and ETF Opportunities Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Opportunities Trust and PGIM ETF 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 ETF Trust are associated (or correlated) with ETF Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Opportunities Trust has no effect on the direction of PGIM ETF i.e., PGIM ETF and ETF Opportunities go up and down completely randomly.

Pair Corralation between PGIM ETF and ETF Opportunities

Given the investment horizon of 90 days PGIM ETF Trust is expected to generate 0.91 times more return on investment than ETF Opportunities. However, PGIM ETF Trust is 1.1 times less risky than ETF Opportunities. It trades about 0.28 of its potential returns per unit of risk. ETF Opportunities Trust is currently generating about 0.23 per unit of risk. If you would invest  4,110  in PGIM ETF Trust on November 28, 2024 and sell it today you would earn a total of  71.00  from holding PGIM ETF Trust or generate 1.73% return on investment over 90 days.

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

PGIM ETF Trust  vs.  ETF Opportunities Trust

PGIM ETF Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM ETF Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PGIM ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ETF Opportunities Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days ETF Opportunities Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ETF Opportunities is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PGIM ETF and ETF Opportunities

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

The idea behind PGIM ETF Trust and ETF Opportunities 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.