Correlation Between Growth Fund and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Growth Fund 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 Growth Fund and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Prudential Jennison Growth, you can compare the effects of market volatilities on Growth Fund 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 Growth Fund with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Prudential Jennison.
Diversification Opportunities for Growth Fund and Prudential Jennison
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Growth and Prudential is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Prudential Jennison Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Growth Fund 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 Growth Fund Of 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 Growth Fund i.e., Growth Fund and Prudential Jennison go up and down completely randomly.
Pair Corralation between Growth Fund and Prudential Jennison
Assuming the 90 days horizon Growth Fund is expected to generate 1.32 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Growth Fund Of is 1.16 times less risky than Prudential Jennison. It trades about 0.09 of its potential returns per unit of risk. Prudential Jennison Growth is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,378 in Prudential Jennison Growth on September 3, 2024 and sell it today you would earn a total of 3,325 from holding Prudential Jennison Growth or generate 75.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Prudential Jennison Growth
Performance |
| Timeline |
| Growth Fund |
| Prudential Jennison |
Growth Fund and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Prudential Jennison
The main advantage of trading using opposite Growth Fund and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund 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.| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Capital World Growth | Growth Fund vs. American Funds Fundamental | Growth Fund vs. Washington Mutual Investors |
| Prudential Jennison vs. American Funds The | Prudential Jennison vs. American Funds The | Prudential Jennison vs. Growth Fund Of | Prudential Jennison vs. Growth Fund Of |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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