Correlation Between Columbia Emerging and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Columbia Emerging 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 Columbia Emerging and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Emerging Markets and Prudential Jennison Financial, you can compare the effects of market volatilities on Columbia Emerging 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 Columbia Emerging with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Emerging and Prudential Jennison.
Diversification Opportunities for Columbia Emerging and Prudential Jennison
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Columbia and Prudential is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Emerging Markets and Prudential Jennison Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Columbia Emerging 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 Columbia Emerging Markets 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 Columbia Emerging i.e., Columbia Emerging and Prudential Jennison go up and down completely randomly.
Pair Corralation between Columbia Emerging and Prudential Jennison
Assuming the 90 days horizon Columbia Emerging is expected to generate 12.68 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Columbia Emerging Markets is 4.61 times less risky than Prudential Jennison. It trades about 0.11 of its potential returns per unit of risk. Prudential Jennison Financial is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,491 in Prudential Jennison Financial on September 1, 2024 and sell it today you would earn a total of 262.00 from holding Prudential Jennison Financial or generate 10.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Columbia Emerging Markets vs. Prudential Jennison Financial
Performance |
| Timeline |
| Columbia Emerging Markets |
| Prudential Jennison |
Columbia Emerging and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Emerging and Prudential Jennison
The main advantage of trading using opposite Columbia Emerging and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Emerging 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.| Columbia Emerging vs. Oklahoma Municipal Fund | Columbia Emerging vs. Old Westbury Municipal | Columbia Emerging vs. Transamerica Funds | Columbia Emerging vs. Bbh Intermediate Municipal |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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