Correlation Between Scharf Balanced and Pgim Jennison

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

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

Diversification Opportunities for Scharf Balanced and Pgim Jennison

-0.07

Correlation Coefficient

Scharf Balanced  Pgim Jennison

Good diversification

The 3 months correlation between Scharf and Pgim is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Balanced Opportunity and Pgim Jennison Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Diversified and Scharf Balanced 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 Scharf Balanced Opportunity 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 Diversified has no effect on the direction of Scharf Balanced i.e., Scharf Balanced and Pgim Jennison go up and down completely randomly.

Pair Corralation between Scharf Balanced and Pgim Jennison

Assuming the 90 days horizon Scharf Balanced Opportunity is expected to generate 0.36 times more return on investment than Pgim Jennison. However, Scharf Balanced Opportunity is 2.77 times less risky than Pgim Jennison. It trades about 0.12 of its potential returns per unit of risk. Pgim Jennison Diversified is currently generating about -0.09 per unit of risk. If you would invest  3,480  in Scharf Balanced Opportunity on December 28, 2024 and sell it today you would earn a total of  134.00  from holding Scharf Balanced Opportunity or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Scharf Balanced Opportunity  vs.  Pgim Jennison Diversified

Scharf Balanced Oppo

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scharf Balanced Opportunity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Scharf Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pgim Jennison Diversified

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pgim Jennison Diversified has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unsteady 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 Scharf Balanced and Pgim Jennison

The main advantage of trading using opposite Scharf Balanced and Pgim Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Balanced 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 Scharf Balanced Opportunity and Pgim Jennison Diversified 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.