Correlation Between Jennison Natural and Emerging Markets

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

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

Diversification Opportunities for Jennison Natural and Emerging Markets

-0.01

Correlation Coefficient

Jennison Natural  Emerging Markets

Good diversification

The 3 months correlation between Jennison and Emerging is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Jennison Natural Resources and Emerging Markets Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Leaders and Jennison Natural 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 Jennison Natural Resources are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Leaders has no effect on the direction of Jennison Natural i.e., Jennison Natural and Emerging Markets go up and down completely randomly.

Pair Corralation between Jennison Natural and Emerging Markets

If you would invest  3,902  in Jennison Natural Resources on October 22, 2024 and sell it today you would earn a total of  299.00  from holding Jennison Natural Resources or generate 7.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.56%
Values	Daily Returns

Jennison Natural Resources  vs.  Emerging Markets Leaders

Jennison Natural Res

Risk-Adjusted Performance

0 of 100

Very Weak

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

Emerging Markets Leaders

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jennison Natural and Emerging Markets

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

The idea behind Jennison Natural Resources and Emerging Markets Leaders 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.