Correlation Between Jennison Natural and Vaughan Nelson

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

Diversification Opportunities for Jennison Natural and Vaughan Nelson

0.42

Correlation Coefficient

Jennison Natural  Vaughan Nelson

Very weak diversification

The 3 months correlation between Jennison and Vaughan is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Jennison Natural Resources and Vaughan Nelson Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaughan Nelson Value 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 Vaughan Nelson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaughan Nelson Value has no effect on the direction of Jennison Natural i.e., Jennison Natural and Vaughan Nelson go up and down completely randomly.

Pair Corralation between Jennison Natural and Vaughan Nelson

Assuming the 90 days horizon Jennison Natural Resources is expected to under-perform the Vaughan Nelson. In addition to that, Jennison Natural is 1.22 times more volatile than Vaughan Nelson Value. It trades about 0.0 of its total potential returns per unit of risk. Vaughan Nelson Value is currently generating about 0.04 per unit of volatility. If you would invest  2,059  in Vaughan Nelson Value on October 5, 2024 and sell it today you would earn a total of  403.00  from holding Vaughan Nelson Value or generate 19.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Jennison Natural Resources  vs.  Vaughan Nelson Value

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 latest conflicting performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Vaughan Nelson Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vaughan Nelson Value 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 Vaughan Nelson

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

The idea behind Jennison Natural Resources and Vaughan Nelson Value 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.