Correlation Between Prudential Jennison and L Abbett
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and L Abbett 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 L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Jennison Blend and L Abbett Growth, you can compare the effects of market volatilities on Prudential Jennison and L Abbett 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 L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and L Abbett.
Diversification Opportunities for Prudential Jennison and L Abbett
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prudential and LGLSX is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Blend and L Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Growth 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 Blend are associated (or correlated) with L Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Abbett Growth has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and L Abbett go up and down completely randomly.
Pair Corralation between Prudential Jennison and L Abbett
Assuming the 90 days horizon Prudential Jennison is expected to generate 1.52 times less return on investment than L Abbett. But when comparing it to its historical volatility, Prudential Jennison Blend is 1.5 times less risky than L Abbett. It trades about 0.11 of its potential returns per unit of risk. L Abbett Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,687 in L Abbett Growth on August 30, 2024 and sell it today you would earn a total of 2,064 from holding L Abbett Growth or generate 76.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Jennison Blend vs. L Abbett Growth
Performance |
| Timeline |
| Prudential Jennison Blend |
| L Abbett Growth |
Prudential Jennison and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and L Abbett
The main advantage of trading using opposite Prudential Jennison and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, L Abbett 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 L Abbett will offset losses from the drop in L Abbett's long position.| Prudential Jennison vs. Hennessy Large Cap | Prudential Jennison vs. Gabelli Global Financial | Prudential Jennison vs. Vanguard Financials Index | Prudential Jennison vs. Prudential Jennison Financial |
| L Abbett vs. Growth Fund Of | L Abbett vs. HUMANA INC | L Abbett vs. Aquagold International | L Abbett vs. Barloworld Ltd ADR |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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