Correlation Between Old Westbury and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Old Westbury 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 Old Westbury and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Short Term and Prudential Jennison Growth, you can compare the effects of market volatilities on Old Westbury 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 Old Westbury with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Prudential Jennison.
Diversification Opportunities for Old Westbury and Prudential Jennison
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Old and Prudential is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Short Term and Prudential Jennison Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Old Westbury 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 Old Westbury Short Term 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 Old Westbury i.e., Old Westbury and Prudential Jennison go up and down completely randomly.
Pair Corralation between Old Westbury and Prudential Jennison
Assuming the 90 days horizon Old Westbury Short Term is expected to generate 0.06 times more return on investment than Prudential Jennison. However, Old Westbury Short Term is 17.34 times less risky than Prudential Jennison. It trades about 0.47 of its potential returns per unit of risk. Prudential Jennison Growth is currently generating about -0.34 per unit of risk. If you would invest 1,014 in Old Westbury Short Term on December 9, 2024 and sell it today you would earn a total of 8.00 from holding Old Westbury Short Term or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Short Term vs. Prudential Jennison Growth
Performance |
| Timeline |
| Old Westbury Short |
| Prudential Jennison |
Old Westbury and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Prudential Jennison
The main advantage of trading using opposite Old Westbury and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury 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.| Old Westbury vs. Thrivent Natural Resources | ||
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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