Correlation Between Prudential Jennison and Elfun Diversified
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Elfun Diversified 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 Elfun Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Jennison Global and Elfun Diversified Fund, you can compare the effects of market volatilities on Prudential Jennison and Elfun Diversified 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 Elfun Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Elfun Diversified.
Diversification Opportunities for Prudential Jennison and Elfun Diversified
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and Elfun is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Global and Elfun Diversified Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elfun Diversified 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 Global are associated (or correlated) with Elfun Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elfun Diversified has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Elfun Diversified go up and down completely randomly.
Pair Corralation between Prudential Jennison and Elfun Diversified
Assuming the 90 days horizon Prudential Jennison Global is expected to under-perform the Elfun Diversified. In addition to that, Prudential Jennison is 2.22 times more volatile than Elfun Diversified Fund. It trades about -0.06 of its total potential returns per unit of risk. Elfun Diversified Fund is currently generating about 0.11 per unit of volatility. If you would invest 2,189 in Elfun Diversified Fund on September 12, 2024 and sell it today you would earn a total of 19.00 from holding Elfun Diversified Fund or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Prudential Jennison Global vs. Elfun Diversified Fund
Performance |
| Timeline |
| Prudential Jennison |
| Elfun Diversified |
Prudential Jennison and Elfun Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Elfun Diversified
The main advantage of trading using opposite Prudential Jennison and Elfun Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Elfun Diversified 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 Elfun Diversified will offset losses from the drop in Elfun Diversified's long position.The idea behind Prudential Jennison Global and Elfun Diversified Fund 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.
| Elfun Diversified vs. Income Fund Of | Elfun Diversified vs. Income Fund Of | Elfun Diversified vs. Income Fund Of | Elfun Diversified vs. Income Fund Of |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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