Correlation Between Vanguard Health and Pgim Jennison

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

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

Diversification Opportunities for Vanguard Health and Pgim Jennison

0.52

Correlation Coefficient

Vanguard Health  Pgim Jennison

Very weak diversification

The 3 months correlation between Vanguard and Pgim is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Pgim Jennison Rising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Rising and Vanguard Health 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 Vanguard Health Care 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 Rising has no effect on the direction of Vanguard Health i.e., Vanguard Health and Pgim Jennison go up and down completely randomly.

Pair Corralation between Vanguard Health and Pgim Jennison

Assuming the 90 days horizon Vanguard Health Care is expected to under-perform the Pgim Jennison. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Health Care is 1.27 times less risky than Pgim Jennison. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Pgim Jennison Rising is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,506  in Pgim Jennison Rising on October 9, 2024 and sell it today you would earn a total of  193.00  from holding Pgim Jennison Rising or generate 12.82% return on investment over 90 days.

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

Vanguard Health Care  vs.  Pgim Jennison Rising

Vanguard Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Health Care has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak 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.

Pgim Jennison Rising

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pgim Jennison Rising 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.

Pair Trading with Vanguard Health and Pgim Jennison

The main advantage of trading using opposite Vanguard Health and Pgim Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Health 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 Vanguard Health Care and Pgim Jennison Rising 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.