Correlation Between Prudential Jennison and Sp Midcap

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

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

Diversification Opportunities for Prudential Jennison and Sp Midcap

-0.36

Correlation Coefficient

Prudential Jennison  Sp Midcap

Very good diversification

The 3 months correlation between Prudential and SPMIX is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Growth and Sp Midcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Midcap Index 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 Growth are associated (or correlated) with Sp Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Midcap Index has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Sp Midcap go up and down completely randomly.

Pair Corralation between Prudential Jennison and Sp Midcap

Assuming the 90 days horizon Prudential Jennison Growth is expected to generate 1.24 times more return on investment than Sp Midcap. However, Prudential Jennison is 1.24 times more volatile than Sp Midcap Index. It trades about 0.1 of its potential returns per unit of risk. Sp Midcap Index is currently generating about -0.34 per unit of risk. If you would invest  6,667  in Prudential Jennison Growth on September 29, 2024 and sell it today you would earn a total of  159.00  from holding Prudential Jennison Growth or generate 2.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Prudential Jennison Growth  vs.  Sp Midcap Index

Prudential Jennison

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Jennison Growth are ranked lower than 10 (%) 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 January 2025.

Sp Midcap Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sp Midcap Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Prudential Jennison and Sp Midcap

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

The idea behind Prudential Jennison Growth and Sp Midcap Index 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.