Correlation Between M Large and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both M Large 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 M Large and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M Large Cap and Prudential Jennison Servative, you can compare the effects of market volatilities on M Large 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 M Large with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Large and Prudential Jennison.
Diversification Opportunities for M Large and Prudential Jennison
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MTCGX and Prudential is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding M Large Cap and Prudential Jennison Servative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and M Large 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 M Large 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 M Large i.e., M Large and Prudential Jennison go up and down completely randomly.
Pair Corralation between M Large and Prudential Jennison
Assuming the 90 days horizon M Large is expected to generate 1.5 times less return on investment than Prudential Jennison. In addition to that, M Large is 1.05 times more volatile than Prudential Jennison Servative. It trades about 0.08 of its total potential returns per unit of risk. Prudential Jennison Servative is currently generating about 0.13 per unit of volatility. If you would invest 1,114 in Prudential Jennison Servative on September 13, 2024 and sell it today you would earn a total of 1,086 from holding Prudential Jennison Servative or generate 97.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
M Large Cap vs. Prudential Jennison Servative
Performance |
| Timeline |
| M Large Cap |
| Prudential Jennison |
M Large and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M Large and Prudential Jennison
The main advantage of trading using opposite M Large and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M Large 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.| M Large vs. Artisan Select Equity | M Large vs. Sarofim Equity | M Large vs. Huber Capital Equity | M Large vs. Touchstone International Equity |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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