Correlation Between Champlain Small and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Champlain Small 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 Champlain Small and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Prudential Jennison Small Cap, you can compare the effects of market volatilities on Champlain Small 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 Champlain Small with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Prudential Jennison.
Diversification Opportunities for Champlain Small and Prudential Jennison
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Champlain and Prudential is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Prudential Jennison Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Champlain Small 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 Champlain Small 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 Champlain Small i.e., Champlain Small and Prudential Jennison go up and down completely randomly.
Pair Corralation between Champlain Small and Prudential Jennison
Assuming the 90 days horizon Champlain Small is expected to generate 1.06 times less return on investment than Prudential Jennison. In addition to that, Champlain Small is 1.05 times more volatile than Prudential Jennison Small Cap. It trades about 0.17 of its total potential returns per unit of risk. Prudential Jennison Small Cap is currently generating about 0.19 per unit of volatility. If you would invest 1,484 in Prudential Jennison Small Cap on September 3, 2024 and sell it today you would earn a total of 208.00 from holding Prudential Jennison Small Cap or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champlain Small vs. Prudential Jennison Small Cap
Performance |
| Timeline |
| Champlain Small |
| Prudential Jennison |
Champlain Small and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Prudential Jennison
The main advantage of trading using opposite Champlain Small and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small 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.| Champlain Small vs. The Hartford Midcap | Champlain Small vs. Mfs Emerging Markets | Champlain Small vs. Wells Fargo Special | Champlain Small vs. Washington Mutual Investors |
| Prudential Jennison vs. Fisher Small Cap | Prudential Jennison vs. Baird Smallmid Cap | Prudential Jennison vs. Tax Managed Mid Small | Prudential Jennison vs. Champlain Small |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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