Correlation Between Prudential Jennison and Aquila Tax-free
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Aquila Tax-free 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 Aquila Tax-free 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 Aquila Tax Free Trust, you can compare the effects of market volatilities on Prudential Jennison and Aquila Tax-free 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 Aquila Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Aquila Tax-free.
Diversification Opportunities for Prudential Jennison and Aquila Tax-free
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Prudential and Aquila is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Financial and Aquila Tax Free Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquila Tax Free 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 Aquila Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquila Tax Free has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Aquila Tax-free go up and down completely randomly.
Pair Corralation between Prudential Jennison and Aquila Tax-free
Assuming the 90 days horizon Prudential Jennison Financial is expected to generate 6.8 times more return on investment than Aquila Tax-free. However, Prudential Jennison is 6.8 times more volatile than Aquila Tax Free Trust. It trades about 0.3 of its potential returns per unit of risk. Aquila Tax Free Trust is currently generating about 0.22 per unit of risk. If you would invest 2,491 in Prudential Jennison Financial on September 1, 2024 and sell it today you would earn a total of 262.00 from holding Prudential Jennison Financial or generate 10.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Prudential Jennison Financial vs. Aquila Tax Free Trust
Performance |
| Timeline |
| Prudential Jennison |
| Aquila Tax Free |
Prudential Jennison and Aquila Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Aquila Tax-free
The main advantage of trading using opposite Prudential Jennison and Aquila Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Aquila Tax-free 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 Aquila Tax-free will offset losses from the drop in Aquila Tax-free's long position.| Prudential Jennison vs. Large Cap Growth Profund | Prudential Jennison vs. T Rowe Price | Prudential Jennison vs. Qs Large Cap | Prudential Jennison vs. Legg Mason Bw |
| Aquila Tax-free vs. 1919 Financial Services | Aquila Tax-free vs. Blackrock Financial Institutions | Aquila Tax-free vs. Mesirow Financial Small | Aquila Tax-free vs. Prudential Jennison Financial |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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