Correlation Between Prudential Jennison and Glg Intl
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Glg Intl 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 Glg Intl 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 Glg Intl Small, you can compare the effects of market volatilities on Prudential Jennison and Glg Intl 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 Glg Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Glg Intl.
Diversification Opportunities for Prudential Jennison and Glg Intl
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prudential and Glg is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Financial and Glg Intl Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glg Intl Small 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 Glg Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glg Intl Small has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Glg Intl go up and down completely randomly.
Pair Corralation between Prudential Jennison and Glg Intl
Assuming the 90 days horizon Prudential Jennison is expected to generate 1.24 times less return on investment than Glg Intl. But when comparing it to its historical volatility, Prudential Jennison Financial is 1.03 times less risky than Glg Intl. It trades about 0.08 of its potential returns per unit of risk. Glg Intl Small is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,272 in Glg Intl Small on September 25, 2024 and sell it today you would earn a total of 3,288 from holding Glg Intl Small or generate 62.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Prudential Jennison Financial vs. Glg Intl Small
Performance |
| Timeline |
| Prudential Jennison |
| Glg Intl Small |
Prudential Jennison and Glg Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Glg Intl
The main advantage of trading using opposite Prudential Jennison and Glg Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Glg Intl 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 Glg Intl will offset losses from the drop in Glg Intl's long position.The idea behind Prudential Jennison Financial and Glg Intl Small pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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