Correlation Between Optimum Small-mid and Pgim Jennison
Can any of the company-specific risk be diversified away by investing in both Optimum Small-mid and Pgim 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 Optimum Small-mid and Pgim Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optimum Small Mid Cap and Pgim Jennison Technology, you can compare the effects of market volatilities on Optimum Small-mid and Pgim 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 Optimum Small-mid with a short position of Pgim Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimum Small-mid and Pgim Jennison.
Diversification Opportunities for Optimum Small-mid and Pgim Jennison
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Optimum and Pgim is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Optimum Small Mid Cap and Pgim Jennison Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Technology and Optimum Small-mid 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 Optimum Small Mid Cap are associated (or correlated) with Pgim Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim Jennison Technology has no effect on the direction of Optimum Small-mid i.e., Optimum Small-mid and Pgim Jennison go up and down completely randomly.
Pair Corralation between Optimum Small-mid and Pgim Jennison
Assuming the 90 days horizon Optimum Small Mid Cap is expected to generate 1.08 times more return on investment than Pgim Jennison. However, Optimum Small-mid is 1.08 times more volatile than Pgim Jennison Technology. It trades about 0.29 of its potential returns per unit of risk. Pgim Jennison Technology is currently generating about 0.22 per unit of risk. If you would invest 1,423 in Optimum Small Mid Cap on September 1, 2024 and sell it today you would earn a total of 124.00 from holding Optimum Small Mid Cap or generate 8.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Optimum Small Mid Cap vs. Pgim Jennison Technology
Performance |
| Timeline |
| Optimum Small Mid |
| Pgim Jennison Technology |
Optimum Small-mid and Pgim Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optimum Small-mid and Pgim Jennison
The main advantage of trading using opposite Optimum Small-mid and Pgim Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimum Small-mid position performs unexpectedly, Pgim 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 Pgim Jennison will offset losses from the drop in Pgim Jennison's long position.| Optimum Small-mid vs. Health Care Fund | Optimum Small-mid vs. Live Oak Health | Optimum Small-mid vs. Lord Abbett Health | Optimum Small-mid vs. Delaware Healthcare Fund |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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