Correlation Between Barings Active and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Barings Active 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 Barings Active and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Active Short and Prudential Jennison Small, you can compare the effects of market volatilities on Barings Active 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 Barings Active with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Prudential Jennison.
Diversification Opportunities for Barings Active and Prudential Jennison
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Prudential is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Prudential Jennison Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison Small and Barings Active 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 Barings Active Short 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 Small has no effect on the direction of Barings Active i.e., Barings Active and Prudential Jennison go up and down completely randomly.
Pair Corralation between Barings Active and Prudential Jennison
Assuming the 90 days horizon Barings Active is expected to generate 41.96 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Barings Active Short is 9.96 times less risky than Prudential Jennison. It trades about 0.09 of its potential returns per unit of risk. Prudential Jennison Small is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 2,096 in Prudential Jennison Small on September 1, 2024 and sell it today you would earn a total of 197.00 from holding Prudential Jennison Small or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Prudential Jennison Small
Performance |
| Timeline |
| Barings Active Short |
| Prudential Jennison Small |
Barings Active and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Prudential Jennison
The main advantage of trading using opposite Barings Active and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active 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.| Barings Active vs. Barings Active Short | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Global Floating |
| Prudential Jennison vs. Western Asset High | Prudential Jennison vs. Prudential Short Duration | Prudential Jennison vs. Mesirow Financial High | Prudential Jennison vs. Blackrock High Yield |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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