Correlation Between Mesirow Financial and Pgim Jennison

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

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

Diversification Opportunities for Mesirow Financial and Pgim Jennison

0.39

Correlation Coefficient

Mesirow Financial  Pgim Jennison

Weak diversification

The 3 months correlation between Mesirow and Pgim is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Pgim Jennison Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Technology and Mesirow Financial 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 Mesirow Financial Small 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 Technology has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Pgim Jennison go up and down completely randomly.

Pair Corralation between Mesirow Financial and Pgim Jennison

Assuming the 90 days horizon Mesirow Financial is expected to generate 5.58 times less return on investment than Pgim Jennison. But when comparing it to its historical volatility, Mesirow Financial Small is 1.3 times less risky than Pgim Jennison. It trades about 0.03 of its potential returns per unit of risk. Pgim Jennison Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,241  in Pgim Jennison Technology on September 30, 2024 and sell it today you would earn a total of  1,484  from holding Pgim Jennison Technology or generate 119.58% return on investment over 90 days.

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

Mesirow Financial Small  vs.  Pgim Jennison Technology

Mesirow Financial Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pgim Jennison Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Jennison Technology are ranked lower than 4 (%) 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 Mesirow Financial and Pgim Jennison

The main advantage of trading using opposite Mesirow Financial and Pgim Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial 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 Mesirow Financial Small and Pgim Jennison Technology 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.