Correlation Between Pgim Jennison and Baron Wealthbuilder

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

Diversification Opportunities for Pgim Jennison and Baron Wealthbuilder

0.5

Correlation Coefficient

Pgim Jennison  Baron Wealthbuilder

Very weak diversification

The 3 months correlation between Pgim and Baron is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Jennison Technology and Baron Wealthbuilder Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Wealthbuilder 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 Baron Wealthbuilder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Wealthbuilder has no effect on the direction of Pgim Jennison i.e., Pgim Jennison and Baron Wealthbuilder go up and down completely randomly.

Pair Corralation between Pgim Jennison and Baron Wealthbuilder

Assuming the 90 days horizon Pgim Jennison Technology is expected to generate 1.55 times more return on investment than Baron Wealthbuilder. However, Pgim Jennison is 1.55 times more volatile than Baron Wealthbuilder Fund. It trades about 0.1 of its potential returns per unit of risk. Baron Wealthbuilder Fund is currently generating about 0.07 per unit of risk. If you would invest  1,324  in Pgim Jennison Technology on October 27, 2024 and sell it today you would earn a total of  1,370  from holding Pgim Jennison Technology or generate 103.47% return on investment over 90 days.

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

Pgim Jennison Technology  vs.  Baron Wealthbuilder Fund

Pgim Jennison Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Jennison Technology are ranked lower than 5 (%) 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.

Baron Wealthbuilder

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Wealthbuilder Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Baron Wealthbuilder may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Pgim Jennison and Baron Wealthbuilder

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

The idea behind Pgim Jennison Technology and Baron Wealthbuilder Fund 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.