Correlation Between Pgim Jennison and Prudential Balanced

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

By analyzing existing cross correlation between Pgim Jennison Rising and Prudential Balanced, you can compare the effects of market volatilities on Pgim Jennison and Prudential Balanced 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 Prudential Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pgim Jennison and Prudential Balanced.

Diversification Opportunities for Pgim Jennison and Prudential Balanced

0.93

Correlation Coefficient

Pgim Jennison  Prudential Balanced

Almost no diversification

The 3 months correlation between Pgim and Prudential is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Jennison Rising and Prudential Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Balanced 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 Rising are associated (or correlated) with Prudential Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Balanced has no effect on the direction of Pgim Jennison i.e., Pgim Jennison and Prudential Balanced go up and down completely randomly.

Pair Corralation between Pgim Jennison and Prudential Balanced

Assuming the 90 days horizon Pgim Jennison Rising is expected to generate 1.45 times more return on investment than Prudential Balanced. However, Pgim Jennison is 1.45 times more volatile than Prudential Balanced. It trades about 0.03 of its potential returns per unit of risk. Prudential Balanced is currently generating about -0.04 per unit of risk. If you would invest  1,665  in Pgim Jennison Rising on December 30, 2024 and sell it today you would earn a total of  22.00  from holding Pgim Jennison Rising or generate 1.32% return on investment over 90 days.

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

Pgim Jennison Rising  vs.  Prudential Balanced

Pgim Jennison Rising

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Jennison Rising are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pgim Jennison is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prudential Balanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential Balanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Prudential Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pgim Jennison and Prudential Balanced

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

The idea behind Pgim Jennison Rising and Prudential Balanced 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.