Correlation Between Pioneer Amt-free and Prudential Jennison

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

By analyzing existing cross correlation between Pioneer Amt Free Municipal and Prudential Jennison Small, you can compare the effects of market volatilities on Pioneer Amt-free 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 Pioneer Amt-free with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pioneer Amt-free and Prudential Jennison.

Diversification Opportunities for Pioneer Amt-free and Prudential Jennison

0.27

Correlation Coefficient

Pioneer Amt-free  Prudential Jennison

Modest diversification

The 3 months correlation between Pioneer and Prudential is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Amt Free Municipal and Prudential Jennison Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison Small and Pioneer Amt-free 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 Pioneer Amt Free Municipal 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 Small has no effect on the direction of Pioneer Amt-free i.e., Pioneer Amt-free and Prudential Jennison go up and down completely randomly.

Pair Corralation between Pioneer Amt-free and Prudential Jennison

Assuming the 90 days horizon Pioneer Amt Free Municipal is expected to generate 0.36 times more return on investment than Prudential Jennison. However, Pioneer Amt Free Municipal is 2.8 times less risky than Prudential Jennison. It trades about -0.03 of its potential returns per unit of risk. Prudential Jennison Small is currently generating about -0.11 per unit of risk. If you would invest  1,278  in Pioneer Amt Free Municipal on December 22, 2024 and sell it today you would lose (9.00) from holding Pioneer Amt Free Municipal or give up 0.7% of portfolio value over 90 days.

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

Pioneer Amt Free Municipal  vs.  Prudential Jennison Small

Pioneer Amt Free

Risk-Adjusted Performance

Very Weak

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

Prudential Jennison Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential Jennison Small 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 Pioneer Amt-free and Prudential Jennison

The main advantage of trading using opposite Pioneer Amt-free and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pioneer Amt-free 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 Pioneer Amt Free Municipal and Prudential Jennison Small 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.