Correlation Between Ab Global and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Ab Global 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 Ab Global and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global Risk and Prudential Jennison Financial, you can compare the effects of market volatilities on Ab Global 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 Ab Global with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Prudential Jennison.
Diversification Opportunities for Ab Global and Prudential Jennison
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between CABIX and Prudential is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and Prudential Jennison Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Ab Global 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 Ab Global Risk 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 Ab Global i.e., Ab Global and Prudential Jennison go up and down completely randomly.
Pair Corralation between Ab Global and Prudential Jennison
Assuming the 90 days horizon Ab Global is expected to generate 4.02 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Ab Global Risk is 1.82 times less risky than Prudential Jennison. It trades about 0.07 of its potential returns per unit of risk. Prudential Jennison Financial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,637 in Prudential Jennison Financial on August 31, 2024 and sell it today you would earn a total of 1,116 from holding Prudential Jennison Financial or generate 68.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global Risk vs. Prudential Jennison Financial
Performance |
| Timeline |
| Ab Global Risk |
| Prudential Jennison |
Ab Global and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Prudential Jennison
The main advantage of trading using opposite Ab Global and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global 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.| Ab Global vs. All Asset Fund | Ab Global vs. Pimco All Asset | Ab Global vs. All Asset Fund | Ab Global vs. All Asset Fund |
| Prudential Jennison vs. Putnam Convertible Incm Gwth | Prudential Jennison vs. Advent Claymore Convertible | Prudential Jennison vs. Virtus Convertible | Prudential Jennison vs. The Gamco Global |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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