Correlation Between Bank of America and Pgim Jennison
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and Pgim Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Pgim Jennison Natural, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of Pgim Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Pgim Jennison.
Diversification Opportunities for Bank of America and Pgim Jennison
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Pgim is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Pgim Jennison Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Natural and Bank of America 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 Bank of America 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 Natural has no effect on the direction of Bank of America i.e., Bank of America and Pgim Jennison go up and down completely randomly.
Pair Corralation between Bank of America and Pgim Jennison
Considering the 90-day investment horizon Bank of America is expected to generate 1.93 times more return on investment than Pgim Jennison. However, Bank of America is 1.93 times more volatile than Pgim Jennison Natural. It trades about 0.31 of its potential returns per unit of risk. Pgim Jennison Natural is currently generating about 0.18 per unit of risk. If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Pgim Jennison Natural
Performance |
| Timeline |
| Bank of America |
| Pgim Jennison Natural |
Bank of America and Pgim Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Pgim Jennison
The main advantage of trading using opposite Bank of America and Pgim Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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