Correlation Between Prudential Emerging and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Prudential 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 Prudential 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 Prudential Emerging Markets and Prudential Jennison Value, you can compare the effects of market volatilities on Prudential 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 Prudential Emerging with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Emerging and Prudential Jennison.
Diversification Opportunities for Prudential Emerging and Prudential Jennison
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prudential and Prudential is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Emerging Markets and Prudential Jennison Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison Value and Prudential 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 Prudential 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 Value has no effect on the direction of Prudential Emerging i.e., Prudential Emerging and Prudential Jennison go up and down completely randomly.
Pair Corralation between Prudential Emerging and Prudential Jennison
Assuming the 90 days horizon Prudential Emerging is expected to generate 265.55 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Prudential Emerging Markets is 1.53 times less risky than Prudential Jennison. It trades about 0.0 of its potential returns per unit of risk. Prudential Jennison Value is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 2,380 in Prudential Jennison Value on September 2, 2024 and sell it today you would earn a total of 149.00 from holding Prudential Jennison Value or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Emerging Markets vs. Prudential Jennison Value
Performance |
| Timeline |
| Prudential Emerging |
| Prudential Jennison Value |
Prudential Emerging and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Emerging and Prudential Jennison
The main advantage of trading using opposite Prudential Emerging and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential 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.| Prudential Emerging vs. Angel Oak Multi Strategy | Prudential Emerging vs. Barings Emerging Markets | Prudential Emerging vs. Pnc Emerging Markets | Prudential Emerging vs. Ashmore Emerging Markets |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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