Correlation Between Prudential Jennison and Putnam Convertible
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Putnam Convertible 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 Convertible 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 Convertible Incm Gwth, you can compare the effects of market volatilities on Prudential Jennison and Putnam Convertible 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 Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Putnam Convertible.
Diversification Opportunities for Prudential Jennison and Putnam Convertible
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prudential and Putnam is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Financial and Putnam Convertible Incm Gwth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible Incm 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 Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Convertible Incm has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Putnam Convertible go up and down completely randomly.
Pair Corralation between Prudential Jennison and Putnam Convertible
Assuming the 90 days horizon Prudential Jennison Financial is expected to generate 2.87 times more return on investment than Putnam Convertible. However, Prudential Jennison is 2.87 times more volatile than Putnam Convertible Incm Gwth. It trades about 0.25 of its potential returns per unit of risk. Putnam Convertible Incm Gwth is currently generating about 0.39 per unit of risk. If you would invest 2,527 in Prudential Jennison Financial on August 31, 2024 and sell it today you would earn a total of 226.00 from holding Prudential Jennison Financial or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Jennison Financial vs. Putnam Convertible Incm Gwth
Performance |
| Timeline |
| Prudential Jennison |
| Putnam Convertible Incm |
Prudential Jennison and Putnam Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Putnam Convertible
The main advantage of trading using opposite Prudential Jennison and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Putnam Convertible 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 Convertible will offset losses from the drop in Putnam Convertible's long position.| Prudential Jennison vs. Putnam Convertible Incm Gwth | Prudential Jennison vs. Advent Claymore Convertible | Prudential Jennison vs. Virtus Convertible | Prudential Jennison vs. The Gamco Global |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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