Correlation Between The Bond and Prudential Jennison

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

By analyzing existing cross correlation between The Bond Fund and Prudential Jennison Servative, you can compare the effects of market volatilities on The Bond and Prudential Jennison 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 The Bond with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Bond and Prudential Jennison.

Diversification Opportunities for The Bond and Prudential Jennison

0.3

Correlation Coefficient

The Bond  Prudential Jennison

Weak diversification

The 3 months correlation between The and Prudential is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding The Bond Fund and Prudential Jennison Servative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and The Bond 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 The Bond Fund are associated (or correlated) with Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison has no effect on the direction of The Bond i.e., The Bond and Prudential Jennison go up and down completely randomly.

Pair Corralation between The Bond and Prudential Jennison

Assuming the 90 days horizon The Bond Fund is expected to generate 0.15 times more return on investment than Prudential Jennison. However, The Bond Fund is 6.51 times less risky than Prudential Jennison. It trades about -0.03 of its potential returns per unit of risk. Prudential Jennison Servative is currently generating about -0.09 per unit of risk. If you would invest  1,767  in The Bond Fund on October 7, 2024 and sell it today you would lose (7.00) from holding The Bond Fund or give up 0.4% of portfolio value over 90 days.

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

The Bond Fund  vs.  Prudential Jennison Servative

Bond Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, The Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prudential Jennison

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Jennison Servative has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Prudential Jennison is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with The Bond and Prudential Jennison

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

The idea behind The Bond Fund and Prudential Jennison Servative 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..