Correlation Between Gamco Natural and Prudential Jennison

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Can any of the company-specific risk be diversified away by investing in both Gamco Natural and Prudential 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 Gamco Natural and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamco Natural Resources and Prudential Jennison Equity, you can compare the effects of market volatilities on Gamco Natural and Prudential 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 Gamco Natural with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Natural and Prudential Jennison.

Diversification Opportunities for Gamco Natural and Prudential Jennison

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Gamco and Prudential is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Natural Resources and Prudential Jennison Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Gamco 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 Gamco Natural Resources are associated (or correlated) with Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison has no effect on the direction of Gamco Natural i.e., Gamco Natural and Prudential Jennison go up and down completely randomly.

Pair Corralation between Gamco Natural and Prudential Jennison

Assuming the 90 days horizon Gamco Natural Resources is expected to under-perform the Prudential Jennison. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gamco Natural Resources is 1.05 times less risky than Prudential Jennison. The mutual fund trades about -0.35 of its potential returns per unit of risk. The Prudential Jennison Equity is currently generating about -0.27 of returns per unit of risk over similar time horizon. If you would invest  1,425  in Prudential Jennison Equity on October 3, 2024 and sell it today you would lose (86.00) from holding Prudential Jennison Equity or give up 6.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Gamco Natural Resources  vs.  Prudential Jennison Equity

 Performance 
       Timeline  
Gamco Natural Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gamco Natural Resources 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.
Prudential Jennison 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Prudential Jennison Equity 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.

Gamco Natural and Prudential Jennison Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gamco Natural and Prudential Jennison

The main advantage of trading using opposite Gamco Natural and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamco Natural position performs unexpectedly, Prudential 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 Prudential Jennison will offset losses from the drop in Prudential Jennison's long position.
The idea behind Gamco Natural Resources and Prudential Jennison Equity 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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