Correlation Between Prudential Jennison and Pgim Securitized

Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Pgim Securitized 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 Pgim Securitized 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 Pgim Securitized Credit, you can compare the effects of market volatilities on Prudential Jennison and Pgim Securitized 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 Pgim Securitized. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Pgim Securitized.

Diversification Opportunities for Prudential Jennison and Pgim Securitized

0.7

Correlation Coefficient

Prudential Jennison  Pgim Securitized

Poor diversification

The 3 months correlation between Prudential and Pgim is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Financial and Pgim Securitized Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Securitized Credit 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 Pgim Securitized. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim Securitized Credit has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Pgim Securitized go up and down completely randomly.

Pair Corralation between Prudential Jennison and Pgim Securitized

Assuming the 90 days horizon Prudential Jennison Financial is expected to generate 8.26 times more return on investment than Pgim Securitized. However, Prudential Jennison is 8.26 times more volatile than Pgim Securitized Credit. It trades about 0.08 of its potential returns per unit of risk. Pgim Securitized Credit is currently generating about 0.27 per unit of risk. If you would invest  1,657  in Prudential Jennison Financial on September 28, 2024 and sell it today you would earn a total of  777.00  from holding Prudential Jennison Financial or generate 46.89% return on investment over 90 days.

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

Prudential Jennison Financial  vs.  Pgim Securitized Credit

Prudential Jennison

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pgim Securitized Credit

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Securitized Credit are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pgim Securitized 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 Pgim Securitized

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

The idea behind Prudential Jennison Financial and Pgim Securitized Credit 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .