Correlation Between Pgim Jennison and Small Cap

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

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

Diversification Opportunities for Pgim Jennison and Small Cap

0.77

Correlation Coefficient

Pgim Jennison  Small Cap

Poor diversification

The 3 months correlation between PGIM and Small is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Jennison Technology and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth and Pgim 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 Pgim Jennison Technology are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Pgim Jennison i.e., Pgim Jennison and Small Cap go up and down completely randomly.

Pair Corralation between Pgim Jennison and Small Cap

Assuming the 90 days horizon Pgim Jennison Technology is expected to generate 1.43 times more return on investment than Small Cap. However, Pgim Jennison is 1.43 times more volatile than Small Cap Growth. It trades about 0.05 of its potential returns per unit of risk. Small Cap Growth is currently generating about 0.06 per unit of risk. If you would invest  2,228  in Pgim Jennison Technology on October 22, 2024 and sell it today you would earn a total of  390.00  from holding Pgim Jennison Technology or generate 17.5% return on investment over 90 days.

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

Pgim Jennison Technology  vs.  Small Cap Growth

Pgim Jennison Technology

Risk-Adjusted Performance

1 of 100

Weak

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

Small Cap Growth

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Small Cap may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Pgim Jennison and Small Cap

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

The idea behind Pgim Jennison Technology and Small Cap 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.