Correlation Between Chestnut Street and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Chestnut Street 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 Chestnut Street and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chestnut Street Exchange and Prudential Jennison Financial, you can compare the effects of market volatilities on Chestnut Street 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 Chestnut Street with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chestnut Street and Prudential Jennison.
Diversification Opportunities for Chestnut Street and Prudential Jennison
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chestnut and Prudential is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Chestnut Street Exchange and Prudential Jennison Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Chestnut Street 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 Chestnut Street Exchange 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 Chestnut Street i.e., Chestnut Street and Prudential Jennison go up and down completely randomly.
Pair Corralation between Chestnut Street and Prudential Jennison
Assuming the 90 days horizon Chestnut Street Exchange is expected to generate 0.48 times more return on investment than Prudential Jennison. However, Chestnut Street Exchange is 2.08 times less risky than Prudential Jennison. It trades about 0.05 of its potential returns per unit of risk. Prudential Jennison Financial is currently generating about -0.02 per unit of risk. If you would invest 112,729 in Chestnut Street Exchange on October 20, 2024 and sell it today you would earn a total of 787.00 from holding Chestnut Street Exchange or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chestnut Street Exchange vs. Prudential Jennison Financial
Performance |
| Timeline |
| Chestnut Street Exchange |
| Prudential Jennison |
Chestnut Street and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chestnut Street and Prudential Jennison
The main advantage of trading using opposite Chestnut Street and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chestnut Street 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.| Chestnut Street vs. The Gabelli Healthcare | Chestnut Street vs. The Hartford Healthcare | Chestnut Street vs. Fidelity Advisor Health | Chestnut Street vs. Allianzgi Health Sciences |
| Prudential Jennison vs. Cmg Ultra Short | Prudential Jennison vs. Virtus Multi Sector Short | Prudential Jennison vs. Alpine Ultra Short | Prudential Jennison vs. Delaware Investments Ultrashort |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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