Correlation Between Baird Small/mid and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Baird Small/mid 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 Baird Small/mid and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Smallmid Cap and Prudential Jennison Blend, you can compare the effects of market volatilities on Baird Small/mid 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 Baird Small/mid with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Small/mid and Prudential Jennison.
Diversification Opportunities for Baird Small/mid and Prudential Jennison
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baird and Prudential is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Baird Smallmid Cap and Prudential Jennison Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison Blend and Baird Small/mid 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 Baird Smallmid Cap 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 Blend has no effect on the direction of Baird Small/mid i.e., Baird Small/mid and Prudential Jennison go up and down completely randomly.
Pair Corralation between Baird Small/mid and Prudential Jennison
Assuming the 90 days horizon Baird Smallmid Cap is expected to generate 1.27 times more return on investment than Prudential Jennison. However, Baird Small/mid is 1.27 times more volatile than Prudential Jennison Blend. It trades about 0.42 of its potential returns per unit of risk. Prudential Jennison Blend is currently generating about 0.35 per unit of risk. If you would invest 1,615 in Baird Smallmid Cap on September 1, 2024 and sell it today you would earn a total of 184.00 from holding Baird Smallmid Cap or generate 11.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Baird Smallmid Cap vs. Prudential Jennison Blend
Performance |
| Timeline |
| Baird Smallmid Cap |
| Prudential Jennison Blend |
Baird Small/mid and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Small/mid and Prudential Jennison
The main advantage of trading using opposite Baird Small/mid and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Small/mid 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.| Baird Small/mid vs. Baird Aggregate Bond | Baird Small/mid vs. Baird Aggregate Bond | Baird Small/mid vs. Baird Short Term Bond | Baird Small/mid vs. Baird Short Term Bond |
| Prudential Jennison vs. Small Pany Growth | Prudential Jennison vs. Legg Mason Partners | Prudential Jennison vs. Jpmorgan Small Cap | Prudential Jennison vs. Baird Smallmid Cap |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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