Correlation Between Prudential Jennison and Prudential Jennison

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

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

Diversification Opportunities for Prudential Jennison and Prudential Jennison

0.71

Correlation Coefficient

Prudential Jennison  Prudential Jennison

Poor diversification

The 3 months correlation between Prudential and Prudential is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Global and Prudential Jennison Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison 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 Global are associated (or correlated) with Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Prudential Jennison go up and down completely randomly.

Pair Corralation between Prudential Jennison and Prudential Jennison

Assuming the 90 days horizon Prudential Jennison is expected to generate 1.06 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Prudential Jennison Global is 1.16 times less risky than Prudential Jennison. It trades about 0.16 of its potential returns per unit of risk. Prudential Jennison Equity is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,279  in Prudential Jennison Equity on August 30, 2024 and sell it today you would earn a total of  163.00  from holding Prudential Jennison Equity or generate 7.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Prudential Jennison Global  vs.  Prudential Jennison Equity

Prudential Jennison

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Jennison Global are ranked lower than 12 (%) 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 December 2024.

Prudential Jennison

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Jennison Equity 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 December 2024.

Pair Trading with Prudential Jennison and Prudential Jennison

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

The idea behind Prudential Jennison Global and Prudential Jennison Equity 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.