Correlation Between Prudential Government and Pgim Jennison

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

Diversification Opportunities for Prudential Government and Pgim Jennison

0.57

Correlation Coefficient

Prudential Government  Pgim Jennison

Very weak diversification

The 3 months correlation between Prudential and Pgim is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Government Income 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 Government 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 Government Income 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 Government i.e., Prudential Government and Pgim Jennison go up and down completely randomly.

Pair Corralation between Prudential Government and Pgim Jennison

Assuming the 90 days horizon Prudential Government is expected to generate 14.48 times less return on investment than Pgim Jennison. But when comparing it to its historical volatility, Prudential Government Income is 3.16 times less risky than Pgim Jennison. It trades about 0.02 of its potential returns per unit of risk. Pgim Jennison International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,031  in Pgim Jennison International on November 28, 2024 and sell it today you would earn a total of  177.00  from holding Pgim Jennison International or generate 5.84% return on investment over 90 days.

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

Prudential Government Income  vs.  Pgim Jennison International

Prudential Government

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Government Income are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pgim Jennison Intern

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Jennison International are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Pgim Jennison may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Prudential Government and Pgim Jennison

The main advantage of trading using opposite Prudential Government and Pgim Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Government 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 Government Income 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.