Correlation Between Smallcap Growth and Pgim Jennison
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Pgim Jennison 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 Smallcap Growth and Pgim Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Pgim Jennison Diversified, you can compare the effects of market volatilities on Smallcap Growth and Pgim Jennison 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 Smallcap Growth with a short position of Pgim Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Pgim Jennison.
Diversification Opportunities for Smallcap Growth and Pgim Jennison
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Smallcap and Pgim is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Pgim Jennison Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Diversified and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Pgim Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim Jennison Diversified has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Pgim Jennison go up and down completely randomly.
Pair Corralation between Smallcap Growth and Pgim Jennison
Assuming the 90 days horizon Smallcap Growth is expected to generate 1.8 times less return on investment than Pgim Jennison. But when comparing it to its historical volatility, Smallcap Growth Fund is 1.05 times less risky than Pgim Jennison. It trades about 0.06 of its potential returns per unit of risk. Pgim Jennison Diversified is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,114 in Pgim Jennison Diversified on September 21, 2024 and sell it today you would earn a total of 808.00 from holding Pgim Jennison Diversified or generate 72.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Pgim Jennison Diversified
Performance |
| Timeline |
| Smallcap Growth |
| Pgim Jennison Diversified |
Smallcap Growth and Pgim Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Pgim Jennison
The main advantage of trading using opposite Smallcap Growth and Pgim Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Pgim Jennison 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 Pgim Jennison will offset losses from the drop in Pgim Jennison's long position.| Smallcap Growth vs. Eip Growth And | Smallcap Growth vs. Rational Defensive Growth | Smallcap Growth vs. Needham Aggressive Growth | Smallcap Growth vs. T Rowe Price |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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