Correlation Between Prudential Jennison and Prudential Commodity
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Prudential Commodity 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 Prudential Commodity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Jennison Growth and Prudential Commodity Strategies, you can compare the effects of market volatilities on Prudential Jennison and Prudential Commodity 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 Prudential Commodity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Prudential Commodity.
Diversification Opportunities for Prudential Jennison and Prudential Commodity
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and Prudential is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Growth and Prudential Commodity Strategie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Commodity 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 Growth are associated (or correlated) with Prudential Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Commodity has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Prudential Commodity go up and down completely randomly.
Pair Corralation between Prudential Jennison and Prudential Commodity
Assuming the 90 days horizon Prudential Jennison is expected to generate 16.06 times less return on investment than Prudential Commodity. In addition to that, Prudential Jennison is 1.35 times more volatile than Prudential Commodity Strategies. It trades about 0.02 of its total potential returns per unit of risk. Prudential Commodity Strategies is currently generating about 0.4 per unit of volatility. If you would invest 651.00 in Prudential Commodity Strategies on October 21, 2024 and sell it today you would earn a total of 44.00 from holding Prudential Commodity Strategies or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Jennison Growth vs. Prudential Commodity Strategie
Performance |
| Timeline |
| Prudential Jennison |
| Prudential Commodity |
Prudential Jennison and Prudential Commodity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Prudential Commodity
The main advantage of trading using opposite Prudential Jennison and Prudential Commodity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Prudential Commodity 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 Prudential Commodity will offset losses from the drop in Prudential Commodity's long position.The idea behind Prudential Jennison Growth and Prudential Commodity Strategies 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.
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |