Correlation Between Prudential Jennison and Putnam High
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Putnam High 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 Putnam High 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 Putnam High Yield, you can compare the effects of market volatilities on Prudential Jennison and Putnam High 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 Putnam High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Putnam High.
Diversification Opportunities for Prudential Jennison and Putnam High
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and Putnam is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Financial and Putnam High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam High Yield 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 Putnam High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam High Yield has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Putnam High go up and down completely randomly.
Pair Corralation between Prudential Jennison and Putnam High
Assuming the 90 days horizon Prudential Jennison Financial is expected to generate 4.54 times more return on investment than Putnam High. However, Prudential Jennison is 4.54 times more volatile than Putnam High Yield. It trades about 0.18 of its potential returns per unit of risk. Putnam High Yield is currently generating about 0.21 per unit of risk. If you would invest 1,770 in Prudential Jennison Financial on August 24, 2024 and sell it today you would earn a total of 911.00 from holding Prudential Jennison Financial or generate 51.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Prudential Jennison Financial vs. Putnam High Yield
Performance |
| Timeline |
| Prudential Jennison |
| Putnam High Yield |
Prudential Jennison and Putnam High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Putnam High
The main advantage of trading using opposite Prudential Jennison and Putnam High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Putnam High 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 Putnam High will offset losses from the drop in Putnam High's long position.| Prudential Jennison vs. Health Care Fund | Prudential Jennison vs. Banking Fund Investor | Prudential Jennison vs. Technology Fund Investor | Prudential Jennison vs. Transportation Fund Investor |
| Putnam High vs. Financials Ultrasector Profund | Putnam High vs. Goldman Sachs Financial | Putnam High vs. Prudential Jennison Financial | Putnam High vs. John Hancock 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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