Correlation Between Prudential Jennison and Arrow Managed

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

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

Diversification Opportunities for Prudential Jennison and Arrow Managed

-0.14

Correlation Coefficient

Prudential Jennison  Arrow Managed

Good diversification

The 3 months correlation between Prudential and Arrow is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Financial and Arrow Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Managed Futures and Prudential Jennison 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 Jennison Financial are associated (or correlated) with Arrow Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Managed Futures has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Arrow Managed go up and down completely randomly.

Pair Corralation between Prudential Jennison and Arrow Managed

Assuming the 90 days horizon Prudential Jennison Financial is expected to under-perform the Arrow Managed. But the mutual fund apears to be less risky and, when comparing its historical volatility, Prudential Jennison Financial is 1.59 times less risky than Arrow Managed. The mutual fund trades about 0.0 of its potential returns per unit of risk. The Arrow Managed Futures is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  546.00  in Arrow Managed Futures on September 14, 2024 and sell it today you would earn a total of  29.00  from holding Arrow Managed Futures or generate 5.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Prudential Jennison Financial  vs.  Arrow Managed Futures

Prudential Jennison

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Jennison Financial are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Prudential Jennison may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Arrow Managed Futures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow Managed Futures has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Arrow Managed 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 Jennison and Arrow Managed

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

The idea behind Prudential Jennison Financial and Arrow Managed Futures 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.