Correlation Between Icon Natural and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Icon Natural 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 Icon Natural and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icon Natural Resources and Prudential Jennison Mid Cap, you can compare the effects of market volatilities on Icon Natural 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 Icon Natural with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Prudential Jennison.
Diversification Opportunities for Icon Natural and Prudential Jennison
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Icon and Prudential is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Prudential Jennison Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison Mid and Icon Natural 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 Icon Natural Resources 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 Mid has no effect on the direction of Icon Natural i.e., Icon Natural and Prudential Jennison go up and down completely randomly.
Pair Corralation between Icon Natural and Prudential Jennison
Assuming the 90 days horizon Icon Natural is expected to generate 1.87 times less return on investment than Prudential Jennison. In addition to that, Icon Natural is 1.09 times more volatile than Prudential Jennison Mid Cap. It trades about 0.03 of its total potential returns per unit of risk. Prudential Jennison Mid Cap is currently generating about 0.06 per unit of volatility. If you would invest 1,873 in Prudential Jennison Mid Cap on September 2, 2024 and sell it today you would earn a total of 672.00 from holding Prudential Jennison Mid Cap or generate 35.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Natural Resources vs. Prudential Jennison Mid Cap
Performance |
| Timeline |
| Icon Natural Resources |
| Prudential Jennison Mid |
Icon Natural and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and Prudential Jennison
The main advantage of trading using opposite Icon Natural and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural 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.| Icon Natural vs. Icon Financial Fund | Icon Natural vs. Dreyfus Natural Resources | Icon Natural vs. Icon Natural Resources | Icon Natural vs. Icon Information Technology |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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