Correlation Between Prudential Jennison and American Funds
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and American Funds 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 American Funds 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 American Funds Growth, you can compare the effects of market volatilities on Prudential Jennison and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and American Funds.
Diversification Opportunities for Prudential Jennison and American Funds
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prudential and American is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Financial and American Funds Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Growth has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and American Funds go up and down completely randomly.
Pair Corralation between Prudential Jennison and American Funds
Assuming the 90 days horizon Prudential Jennison Financial is expected to generate 1.12 times more return on investment than American Funds. However, Prudential Jennison is 1.12 times more volatile than American Funds Growth. It trades about 0.2 of its potential returns per unit of risk. American Funds Growth is currently generating about 0.14 per unit of risk. If you would invest 1,680 in Prudential Jennison Financial on September 1, 2024 and sell it today you would earn a total of 1,073 from holding Prudential Jennison Financial or generate 63.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Jennison Financial vs. American Funds Growth
Performance |
| Timeline |
| Prudential Jennison |
| American Funds Growth |
Prudential Jennison and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and American Funds
The main advantage of trading using opposite Prudential Jennison and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 |
| American Funds vs. American Funds Growth | American Funds vs. American Funds Growth | American Funds vs. HUMANA INC | American Funds vs. Aquagold International |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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