Correlation Between Prudential Jennison and Small Cap
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Small Cap 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 Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Jennison Financial and Small Cap Growth, you can compare the effects of market volatilities on Prudential Jennison and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Small Cap.
Diversification Opportunities for Prudential Jennison and Small Cap
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prudential and Small is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Financial and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap 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 Financial are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Small Cap go up and down completely randomly.
Pair Corralation between Prudential Jennison and Small Cap
Assuming the 90 days horizon Prudential Jennison Financial is expected to under-perform the Small Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Prudential Jennison Financial is 1.46 times less risky than Small Cap. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Small Cap Growth is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,400 in Small Cap Growth on September 12, 2024 and sell it today you would earn a total of 1.00 from holding Small Cap Growth or generate 0.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Prudential Jennison Financial vs. Small Cap Growth
Performance |
| Timeline |
| Prudential Jennison |
| Small Cap Growth |
Prudential Jennison and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Small Cap
The main advantage of trading using opposite Prudential Jennison and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Prudential Jennison vs. City National Rochdale | Prudential Jennison vs. Payden High Income | Prudential Jennison vs. Jpmorgan High Yield | Prudential Jennison vs. Blackrock High Yield |
| Small Cap vs. Wilmington Trust Retirement | Small Cap vs. Putnman Retirement Ready | Small Cap vs. Dimensional Retirement Income | Small Cap vs. Deutsche Multi Asset Moderate |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Global Correlations Find global opportunities by holding instruments from different markets |