Correlation Between Jennison Natural and Transamerica Large

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

Diversification Opportunities for Jennison Natural and Transamerica Large

0.09

Correlation Coefficient

Jennison Natural  Transamerica Large

Significant diversification

The 3 months correlation between Jennison and Transamerica is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Jennison Natural Resources and Transamerica Large Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Large Core 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 Transamerica Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Large Core has no effect on the direction of Jennison Natural i.e., Jennison Natural and Transamerica Large go up and down completely randomly.

Pair Corralation between Jennison Natural and Transamerica Large

Assuming the 90 days horizon Jennison Natural Resources is expected to generate 1.42 times more return on investment than Transamerica Large. However, Jennison Natural is 1.42 times more volatile than Transamerica Large Core. It trades about 0.03 of its potential returns per unit of risk. Transamerica Large Core is currently generating about -0.11 per unit of risk. If you would invest  3,925  in Jennison Natural Resources on December 24, 2024 and sell it today you would earn a total of  66.00  from holding Jennison Natural Resources or generate 1.68% return on investment over 90 days.

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

Jennison Natural Resources  vs.  Transamerica Large Core

Jennison Natural Res

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jennison Natural Resources are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.

Transamerica Large Core

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transamerica Large Core has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Jennison Natural and Transamerica Large

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

The idea behind Jennison Natural Resources and Transamerica Large Core 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.