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 International, 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
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Absolute and Prudential is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Prudential Jennison Internatio 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 is expected to generate 1.41 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 19.55 times less risky than Prudential Jennison. It trades about 0.54 of its potential returns per unit of risk. Prudential Jennison International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,747 in Prudential Jennison International on September 14, 2024 and sell it today you would earn a total of 255.00 from holding Prudential Jennison International or generate 9.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Prudential Jennison Internatio
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. Tekla Healthcare Opportunities | Prudential Jennison vs. Prudential Health Sciences | Prudential Jennison vs. Fidelity Advisor Health | Prudential Jennison vs. Lord Abbett Health |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |