Correlation Between Shelton Emerging and Prudential Jennison

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

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

Diversification Opportunities for Shelton Emerging and Prudential Jennison

0.31

Correlation Coefficient

Shelton Emerging  Prudential Jennison

Weak diversification

The 3 months correlation between Shelton and Prudential is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Emerging Markets and Prudential Jennison Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Shelton Emerging 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 Shelton Emerging Markets 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 Shelton Emerging i.e., Shelton Emerging and Prudential Jennison go up and down completely randomly.

Pair Corralation between Shelton Emerging and Prudential Jennison

Assuming the 90 days horizon Shelton Emerging is expected to generate 9.06 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Shelton Emerging Markets is 1.12 times less risky than Prudential Jennison. It trades about 0.01 of its potential returns per unit of risk. Prudential Jennison Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,614  in Prudential Jennison Financial on December 5, 2024 and sell it today you would earn a total of  905.00  from holding Prudential Jennison Financial or generate 56.07% return on investment over 90 days.

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

Shelton Emerging Markets  vs.  Prudential Jennison Financial

Shelton Emerging Markets

Risk-Adjusted Performance

Weak

Over the last 90 days Shelton Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Shelton Emerging 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

Very Weak

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

Pair Trading with Shelton Emerging and Prudential Jennison

The main advantage of trading using opposite Shelton Emerging and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelton Emerging 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 Shelton Emerging Markets and Prudential Jennison Financial 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.