Correlation Between Columbia Global and Prudential Jennison

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

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

Diversification Opportunities for Columbia Global and Prudential Jennison

0.52

Correlation Coefficient

Columbia Global  Prudential Jennison

Very weak diversification

The 3 months correlation between Columbia and Prudential is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Global Technology and Prudential Jennison Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison Mid and Columbia Global 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 Columbia Global Technology 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 Mid has no effect on the direction of Columbia Global i.e., Columbia Global and Prudential Jennison go up and down completely randomly.

Pair Corralation between Columbia Global and Prudential Jennison

Assuming the 90 days horizon Columbia Global Technology is expected to generate 1.1 times more return on investment than Prudential Jennison. However, Columbia Global is 1.1 times more volatile than Prudential Jennison Mid Cap. It trades about -0.06 of its potential returns per unit of risk. Prudential Jennison Mid Cap is currently generating about -0.22 per unit of risk. If you would invest  9,486  in Columbia Global Technology on December 4, 2024 and sell it today you would lose (611.00) from holding Columbia Global Technology or give up 6.44% of portfolio value over 90 days.

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

Columbia Global Technology  vs.  Prudential Jennison Mid Cap

Columbia Global Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Global Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Prudential Jennison Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential Jennison Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Columbia Global and Prudential Jennison

The main advantage of trading using opposite Columbia Global and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Global 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 Columbia Global Technology and Prudential Jennison Mid Cap 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.