Correlation Between Leggmason Partners and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Leggmason Partners 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 Leggmason Partners and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leggmason Partners Institutional and Prudential Jennison Small, you can compare the effects of market volatilities on Leggmason Partners 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 Leggmason Partners with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggmason Partners and Prudential Jennison.
Diversification Opportunities for Leggmason Partners and Prudential Jennison
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Leggmason and Prudential is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Leggmason Partners Institution and Prudential Jennison Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison Small and Leggmason Partners 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 Leggmason Partners Institutional 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 Small has no effect on the direction of Leggmason Partners i.e., Leggmason Partners and Prudential Jennison go up and down completely randomly.
Pair Corralation between Leggmason Partners and Prudential Jennison
If you would invest 2,472 in Prudential Jennison Small on August 31, 2024 and sell it today you would earn a total of 188.00 from holding Prudential Jennison Small or generate 7.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leggmason Partners Institution vs. Prudential Jennison Small
Performance |
| Timeline |
| Leggmason Partners |
| Prudential Jennison Small |
Leggmason Partners and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leggmason Partners and Prudential Jennison
The main advantage of trading using opposite Leggmason Partners and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leggmason Partners 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.| Leggmason Partners vs. Franklin Lifesmart Retirement | Leggmason Partners vs. Saat Moderate Strategy | Leggmason Partners vs. Target Retirement 2040 | Leggmason Partners vs. Franklin Lifesmart Retirement |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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