Correlation Between Pgim Jennison and Madison Core

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

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

Diversification Opportunities for Pgim Jennison and Madison Core

0.26

Correlation Coefficient

Pgim Jennison  Madison Core

Modest diversification

The 3 months correlation between PGIM and Madison is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Jennison Diversified and Madison E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison E Bond and Pgim Jennison 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 Pgim Jennison Diversified are associated (or correlated) with Madison Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison E Bond has no effect on the direction of Pgim Jennison i.e., Pgim Jennison and Madison Core go up and down completely randomly.

Pair Corralation between Pgim Jennison and Madison Core

Assuming the 90 days horizon Pgim Jennison Diversified is expected to under-perform the Madison Core. In addition to that, Pgim Jennison is 6.49 times more volatile than Madison E Bond. It trades about -0.14 of its total potential returns per unit of risk. Madison E Bond is currently generating about 0.04 per unit of volatility. If you would invest  900.00  in Madison E Bond on December 4, 2024 and sell it today you would earn a total of  6.00  from holding Madison E Bond or generate 0.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Pgim Jennison Diversified  vs.  Madison E Bond

Pgim Jennison Diversified

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pgim Jennison Diversified 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 April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Madison E Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Madison E Bond are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Madison Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pgim Jennison and Madison Core

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

The idea behind Pgim Jennison Diversified and Madison E 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.