Correlation Between Pgim Jennison and Vanguard Short

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

Diversification Opportunities for Pgim Jennison and Vanguard Short

-0.46

Correlation Coefficient

Pgim Jennison  Vanguard Short

Very good diversification

The 3 months correlation between PGIM and Vanguard is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Jennison Diversified and Vanguard Short Term Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term 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 Vanguard Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of Pgim Jennison i.e., Pgim Jennison and Vanguard Short go up and down completely randomly.

Pair Corralation between Pgim Jennison and Vanguard Short

Assuming the 90 days horizon Pgim Jennison Diversified is expected to under-perform the Vanguard Short. In addition to that, Pgim Jennison is 24.48 times more volatile than Vanguard Short Term Government. It trades about -0.09 of its total potential returns per unit of risk. Vanguard Short Term Government is currently generating about 0.27 per unit of volatility. If you would invest  2,423  in Vanguard Short Term Government on November 29, 2024 and sell it today you would earn a total of  29.00  from holding Vanguard Short Term Government or generate 1.2% return on investment over 90 days.

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

Pgim Jennison Diversified  vs.  Vanguard Short Term Government

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 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.

Vanguard Short Term

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Short Term Government are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Vanguard Short 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 Vanguard Short

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

The idea behind Pgim Jennison Diversified and Vanguard Short Term Government 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.