Correlation Between Prudential Jennison and Energy Services
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Energy Services 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 Jennison and Energy Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Jennison Mid Cap and Energy Services Fund, you can compare the effects of market volatilities on Prudential Jennison and Energy Services 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 Jennison with a short position of Energy Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Energy Services.
Diversification Opportunities for Prudential Jennison and Energy Services
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prudential and ENERGY is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Mid Cap and Energy Services Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Services and Prudential Jennison 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 Jennison Mid Cap are associated (or correlated) with Energy Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Services has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Energy Services go up and down completely randomly.
Pair Corralation between Prudential Jennison and Energy Services
Assuming the 90 days horizon Prudential Jennison is expected to generate 1.45 times less return on investment than Energy Services. But when comparing it to its historical volatility, Prudential Jennison Mid Cap is 2.05 times less risky than Energy Services. It trades about 0.31 of its potential returns per unit of risk. Energy Services Fund is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 22,044 in Energy Services Fund on August 31, 2024 and sell it today you would earn a total of 2,442 from holding Energy Services Fund or generate 11.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Jennison Mid Cap vs. Energy Services Fund
Performance |
| Timeline |
| Prudential Jennison Mid |
| Energy Services |
Prudential Jennison and Energy Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Energy Services
The main advantage of trading using opposite Prudential Jennison and Energy Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Energy Services 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 Energy Services will offset losses from the drop in Energy Services' long position.| Prudential Jennison vs. Energy Services Fund | Prudential Jennison vs. Firsthand Alternative Energy | Prudential Jennison vs. Gmo Resources | Prudential Jennison vs. Oil Gas Ultrasector |
| Energy Services vs. Energy Fund Investor | Energy Services vs. Basic Materials Fund | Energy Services vs. Electronics Fund Investor | Energy Services vs. Health Care Fund |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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