Correlation Between Biotechnology Fund and Pgim Jennison

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

By analyzing existing cross correlation between Biotechnology Fund Class and Pgim Jennison Technology, you can compare the effects of market volatilities on Biotechnology Fund and Pgim Jennison 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 Biotechnology Fund with a short position of Pgim Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biotechnology Fund and Pgim Jennison.

Diversification Opportunities for Biotechnology Fund and Pgim Jennison

0.33

Correlation Coefficient

Biotechnology Fund  Pgim Jennison

Weak diversification

The 3 months correlation between Biotechnology and Pgim is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Biotechnology Fund Class and Pgim Jennison Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Technology and Biotechnology Fund 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 Biotechnology Fund Class are associated (or correlated) with Pgim Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim Jennison Technology has no effect on the direction of Biotechnology Fund i.e., Biotechnology Fund and Pgim Jennison go up and down completely randomly.

Pair Corralation between Biotechnology Fund and Pgim Jennison

Assuming the 90 days horizon Biotechnology Fund is expected to generate 2.85 times less return on investment than Pgim Jennison. But when comparing it to its historical volatility, Biotechnology Fund Class is 1.24 times less risky than Pgim Jennison. It trades about 0.06 of its potential returns per unit of risk. Pgim Jennison Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,619  in Pgim Jennison Technology on October 25, 2024 and sell it today you would earn a total of  95.00  from holding Pgim Jennison Technology or generate 3.63% return on investment over 90 days.

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

Biotechnology Fund Class  vs.  Pgim Jennison Technology

Biotechnology Fund Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biotechnology Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pgim Jennison Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Jennison Technology are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Pgim Jennison may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Biotechnology Fund and Pgim Jennison

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

The idea behind Biotechnology Fund Class and Pgim Jennison Technology 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.