Correlation Between Prudential Jennison and Transamerica International

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

Diversification Opportunities for Prudential Jennison and Transamerica International

0.3

Correlation Coefficient

Prudential Jennison  Transamerica International

Weak diversification

The 3 months correlation between Prudential and Transamerica is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Financial and Transamerica International Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica International 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 Transamerica International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica International has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Transamerica International go up and down completely randomly.

Pair Corralation between Prudential Jennison and Transamerica International

Assuming the 90 days horizon Prudential Jennison Financial is expected to generate 0.91 times more return on investment than Transamerica International. However, Prudential Jennison Financial is 1.1 times less risky than Transamerica International. It trades about 0.1 of its potential returns per unit of risk. Transamerica International Growth is currently generating about -0.01 per unit of risk. If you would invest  1,514  in Prudential Jennison Financial on October 5, 2024 and sell it today you would earn a total of  882.00  from holding Prudential Jennison Financial or generate 58.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.78%
Values	Daily Returns

Prudential Jennison Financial  vs.  Transamerica International Gro

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.

Transamerica International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transamerica International Growth 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 technical indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Prudential Jennison and Transamerica International

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

The idea behind Prudential Jennison Financial and Transamerica International Growth 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.