Correlation Between Jennison Natural and Templeton Strained

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

Diversification Opportunities for Jennison Natural and Templeton Strained

0.64

Correlation Coefficient

Jennison Natural  Templeton Strained

Poor diversification

The 3 months correlation between Jennison and Templeton is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Jennison Natural Resources and Templeton Strained Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Strained Bond 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 Templeton Strained. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Strained Bond has no effect on the direction of Jennison Natural i.e., Jennison Natural and Templeton Strained go up and down completely randomly.

Pair Corralation between Jennison Natural and Templeton Strained

Assuming the 90 days horizon Jennison Natural Resources is expected to under-perform the Templeton Strained. In addition to that, Jennison Natural is 5.03 times more volatile than Templeton Strained Bond. It trades about -0.04 of its total potential returns per unit of risk. Templeton Strained Bond is currently generating about -0.02 per unit of volatility. If you would invest  1,021  in Templeton Strained Bond on October 8, 2024 and sell it today you would lose (3.00) from holding Templeton Strained Bond or give up 0.29% of portfolio value over 90 days.

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

Jennison Natural Resources  vs.  Templeton Strained Bond

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.

Templeton Strained Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Templeton Strained Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Templeton Strained 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 Templeton Strained

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

The idea behind Jennison Natural Resources and Templeton Strained Bond 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.