Correlation Between Prudential Jennison and Franklin California
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Franklin California 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 Franklin California 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 Franklin California Tax Free, you can compare the effects of market volatilities on Prudential Jennison and Franklin California 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 Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Franklin California.
Diversification Opportunities for Prudential Jennison and Franklin California
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and Franklin is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Financial and Franklin California Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California Tax 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 Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California Tax has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Franklin California go up and down completely randomly.
Pair Corralation between Prudential Jennison and Franklin California
Assuming the 90 days horizon Prudential Jennison Financial is expected to generate 4.38 times more return on investment than Franklin California. However, Prudential Jennison is 4.38 times more volatile than Franklin California Tax Free. It trades about 0.23 of its potential returns per unit of risk. Franklin California Tax Free is currently generating about -0.04 per unit of risk. If you would invest 2,429 in Prudential Jennison Financial on August 29, 2024 and sell it today you would earn a total of 325.00 from holding Prudential Jennison Financial or generate 13.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Jennison Financial vs. Franklin California Tax Free
Performance |
| Timeline |
| Prudential Jennison |
| Franklin California Tax |
Prudential Jennison and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Franklin California
The main advantage of trading using opposite Prudential Jennison and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Franklin California 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 Franklin California will offset losses from the drop in Franklin California's long position.| Prudential Jennison vs. T Rowe Price | Prudential Jennison vs. Davis Financial Fund | Prudential Jennison vs. HUMANA INC | Prudential Jennison vs. Aquagold International |
| Franklin California vs. Angel Oak Financial | Franklin California vs. Artisan High Income | Franklin California vs. Blrc Sgy Mnp | Franklin California 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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