Correlation Between VanEck Inflation and PGIM ETF

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

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

Diversification Opportunities for VanEck Inflation and PGIM ETF

0.9

Correlation Coefficient

VanEck Inflation  PGIM ETF

Almost no diversification

The 3 months correlation between VanEck and PGIM is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Inflation Allocation 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 VanEck Inflation 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 VanEck Inflation Allocation 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 VanEck Inflation i.e., VanEck Inflation and PGIM ETF go up and down completely randomly.

Pair Corralation between VanEck Inflation and PGIM ETF

Given the investment horizon of 90 days VanEck Inflation is expected to generate 1.5 times less return on investment than PGIM ETF. In addition to that, VanEck Inflation is 1.26 times more volatile than PGIM ETF Trust. It trades about 0.2 of its total potential returns per unit of risk. PGIM ETF Trust is currently generating about 0.38 per unit of volatility. If you would invest  2,942  in PGIM ETF Trust on September 2, 2024 and sell it today you would earn a total of  136.00  from holding PGIM ETF Trust or generate 4.62% return on investment over 90 days.

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

VanEck Inflation Allocation  vs.  PGIM ETF Trust

VanEck Inflation All

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Inflation Allocation are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, VanEck Inflation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 VanEck Inflation and PGIM ETF

The main advantage of trading using opposite VanEck Inflation and PGIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Inflation 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 VanEck Inflation Allocation 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.