Correlation Between Prudential Day and Pgim Jennison

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

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

Diversification Opportunities for Prudential Day and Pgim Jennison

0.41

Correlation Coefficient

Prudential Day  Pgim Jennison

Very weak diversification

The 3 months correlation between Prudential and Pgim is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Day One and Pgim Jennison International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Intern and Prudential Day 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 Prudential Day One 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 Intern has no effect on the direction of Prudential Day i.e., Prudential Day and Pgim Jennison go up and down completely randomly.

Pair Corralation between Prudential Day and Pgim Jennison

Assuming the 90 days horizon Prudential Day is expected to generate 50.14 times less return on investment than Pgim Jennison. But when comparing it to its historical volatility, Prudential Day One is 1.47 times less risky than Pgim Jennison. It trades about 0.0 of its potential returns per unit of risk. Pgim Jennison International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,588  in Pgim Jennison International on September 29, 2024 and sell it today you would earn a total of  395.00  from holding Pgim Jennison International or generate 15.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Prudential Day One  vs.  Pgim Jennison International

Prudential Day One

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Day One has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward-looking indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pgim Jennison Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pgim Jennison International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, 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 Prudential Day and Pgim Jennison

The main advantage of trading using opposite Prudential Day and Pgim Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Day 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 Prudential Day One and Pgim Jennison International 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.