Correlation Between Eagle Small and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Eagle 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 Eagle 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 Eagle Small Cap and Prudential Jennison Equity, you can compare the effects of market volatilities on Eagle 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 Eagle Small with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Small and Prudential Jennison.
Diversification Opportunities for Eagle Small and Prudential Jennison
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eagle and Prudential is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Small Cap and Prudential Jennison Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Eagle 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 Eagle Small Cap 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 Eagle Small i.e., Eagle Small and Prudential Jennison go up and down completely randomly.
Pair Corralation between Eagle Small and Prudential Jennison
Assuming the 90 days horizon Eagle Small Cap is expected to generate 2.59 times more return on investment than Prudential Jennison. However, Eagle Small is 2.59 times more volatile than Prudential Jennison Equity. It trades about 0.2 of its potential returns per unit of risk. Prudential Jennison Equity is currently generating about -0.18 per unit of risk. If you would invest 2,502 in Eagle Small Cap on August 24, 2024 and sell it today you would earn a total of 160.00 from holding Eagle Small Cap or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Small Cap vs. Prudential Jennison Equity
Performance |
| Timeline |
| Eagle Small Cap |
| Prudential Jennison |
Eagle Small and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Small and Prudential Jennison
The main advantage of trading using opposite Eagle Small and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle 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.| Eagle Small vs. Teton Vertible Securities | Eagle Small vs. Harbor Vertible Securities | Eagle Small vs. Mainstay Vertible Fund | Eagle Small vs. Invesco Vertible Securities |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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