Correlation Between Highland Longshort and Pgim Jennison

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

By analyzing existing cross correlation between Highland Longshort Healthcare and Pgim Jennison Rising, you can compare the effects of market volatilities on Highland Longshort and Pgim 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 Highland Longshort with a short position of Pgim Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Longshort and Pgim Jennison.

Diversification Opportunities for Highland Longshort and Pgim Jennison

0.32

Correlation Coefficient

Highland Longshort  Pgim Jennison

Weak diversification

The 3 months correlation between Highland and Pgim is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Pgim Jennison Rising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Rising and Highland Longshort 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 Highland Longshort Healthcare are associated (or correlated) with Pgim Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim Jennison Rising has no effect on the direction of Highland Longshort i.e., Highland Longshort and Pgim Jennison go up and down completely randomly.

Pair Corralation between Highland Longshort and Pgim Jennison

Assuming the 90 days horizon Highland Longshort Healthcare is expected to under-perform the Pgim Jennison. But the mutual fund apears to be less risky and, when comparing its historical volatility, Highland Longshort Healthcare is 3.9 times less risky than Pgim Jennison. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Pgim Jennison Rising is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,683  in Pgim Jennison Rising on December 21, 2024 and sell it today you would earn a total of  21.00  from holding Pgim Jennison Rising or generate 1.25% return on investment over 90 days.

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

Highland Longshort Healthcare  vs.  Pgim Jennison Rising

Highland Longshort

Risk-Adjusted Performance

Very Weak

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

Pgim Jennison Rising

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Jennison Rising are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pgim 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 Highland Longshort and Pgim Jennison

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

The idea behind Highland Longshort Healthcare and Pgim Jennison Rising 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.