Correlation Between Prudential Jennison and Columbia Seligman
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Columbia Seligman 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 Columbia Seligman 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 Columbia Seligman Global, you can compare the effects of market volatilities on Prudential Jennison and Columbia Seligman 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 Columbia Seligman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Columbia Seligman.
Diversification Opportunities for Prudential Jennison and Columbia Seligman
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prudential and Columbia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Financial and Columbia Seligman Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Seligman Global 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 Columbia Seligman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Seligman Global has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Columbia Seligman go up and down completely randomly.
Pair Corralation between Prudential Jennison and Columbia Seligman
Assuming the 90 days horizon Prudential Jennison Financial is expected to generate 0.71 times more return on investment than Columbia Seligman. However, Prudential Jennison Financial is 1.4 times less risky than Columbia Seligman. It trades about 0.11 of its potential returns per unit of risk. Columbia Seligman Global is currently generating about 0.07 per unit of risk. If you would invest 1,594 in Prudential Jennison Financial on September 14, 2024 and sell it today you would earn a total of 1,069 from holding Prudential Jennison Financial or generate 67.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Jennison Financial vs. Columbia Seligman Global
Performance |
| Timeline |
| Prudential Jennison |
| Columbia Seligman Global |
Prudential Jennison and Columbia Seligman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Columbia Seligman
The main advantage of trading using opposite Prudential Jennison and Columbia Seligman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Columbia Seligman 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 Columbia Seligman will offset losses from the drop in Columbia Seligman'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 |
| Columbia Seligman vs. Morningstar Global Income | Columbia Seligman vs. Alliancebernstein Global High | Columbia Seligman vs. Legg Mason Global | Columbia Seligman vs. Dreyfusstandish Global Fixed |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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