Correlation Between Absolute Convertible and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible 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 Absolute Convertible and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Prudential Jennison Financial, you can compare the effects of market volatilities on Absolute Convertible 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 Absolute Convertible with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Prudential Jennison.
Diversification Opportunities for Absolute Convertible and Prudential Jennison
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Absolute and Prudential is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Prudential Jennison Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Absolute Convertible 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 Absolute Convertible Arbitrage 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 Absolute Convertible i.e., Absolute Convertible and Prudential Jennison go up and down completely randomly.
Pair Corralation between Absolute Convertible and Prudential Jennison
Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to generate 0.07 times more return on investment than Prudential Jennison. However, Absolute Convertible Arbitrage is 13.42 times less risky than Prudential Jennison. It trades about 0.38 of its potential returns per unit of risk. Prudential Jennison Financial is currently generating about -0.02 per unit of risk. If you would invest 1,146 in Absolute Convertible Arbitrage on September 13, 2024 and sell it today you would earn a total of 5.00 from holding Absolute Convertible Arbitrage or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Prudential Jennison Financial
Performance |
| Timeline |
| Absolute Convertible |
| Prudential Jennison |
Absolute Convertible and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Prudential Jennison
The main advantage of trading using opposite Absolute Convertible and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible 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.| Absolute Convertible vs. Allianzgi Convertible Income | Absolute Convertible vs. Lord Abbett Convertible | Absolute Convertible vs. Rationalpier 88 Convertible | Absolute Convertible vs. Virtus Convertible |
| Prudential Jennison vs. Angel Oak Ultrashort | Prudential Jennison vs. Rbc Short Duration | Prudential Jennison vs. Lord Abbett Short | Prudential Jennison vs. Virtus Multi Sector Short |
Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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