Correlation Between Prudential Jennison and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Franklin Natural 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 Natural 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 Natural Resources, you can compare the effects of market volatilities on Prudential Jennison and Franklin Natural 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 Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Franklin Natural.
Diversification Opportunities for Prudential Jennison and Franklin Natural
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prudential and Franklin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Financial and Franklin Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Natural Res 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 Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Natural Res has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Franklin Natural go up and down completely randomly.
Pair Corralation between Prudential Jennison and Franklin Natural
Assuming the 90 days horizon Prudential Jennison Financial is expected to generate 0.84 times more return on investment than Franklin Natural. However, Prudential Jennison Financial is 1.2 times less risky than Franklin Natural. It trades about -0.02 of its potential returns per unit of risk. Franklin Natural Resources is currently generating about -0.05 per unit of risk. If you would invest 2,674 in Prudential Jennison Financial on September 13, 2024 and sell it today you would lose (11.00) from holding Prudential Jennison Financial or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Prudential Jennison Financial vs. Franklin Natural Resources
Performance |
| Timeline |
| Prudential Jennison |
| Franklin Natural Res |
Prudential Jennison and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Franklin Natural
The main advantage of trading using opposite Prudential Jennison and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Franklin Natural 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 Natural will offset losses from the drop in Franklin Natural's long position.| Prudential Jennison vs. Angel Oak Ultrashort | Prudential Jennison vs. Rbc Short Duration | Prudential Jennison vs. Lord Abbett Short | Prudential Jennison vs. Virtus Multi Sector Short |
| Franklin Natural vs. Small Pany Growth | Franklin Natural vs. Cardinal Small Cap | Franklin Natural vs. Franklin Small Cap | Franklin Natural vs. Vy Columbia Small |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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