Correlation Between Prudential Jennison and Gmo Small
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Gmo Small 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 Gmo Small 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 Gmo Small Cap, you can compare the effects of market volatilities on Prudential Jennison and Gmo Small 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 Gmo Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Gmo Small.
Diversification Opportunities for Prudential Jennison and Gmo Small
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prudential and Gmo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Growth and Gmo Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Small Cap 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 Gmo Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Small Cap has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Gmo Small go up and down completely randomly.
Pair Corralation between Prudential Jennison and Gmo Small
Assuming the 90 days horizon Prudential Jennison is expected to generate 1.45 times less return on investment than Gmo Small. But when comparing it to its historical volatility, Prudential Jennison Growth is 1.36 times less risky than Gmo Small. It trades about 0.17 of its potential returns per unit of risk. Gmo Small Cap is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,601 in Gmo Small Cap on August 29, 2024 and sell it today you would earn a total of 151.00 from holding Gmo Small Cap or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Prudential Jennison Growth vs. Gmo Small Cap
Performance |
| Timeline |
| Prudential Jennison |
| Gmo Small Cap |
Prudential Jennison and Gmo Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Gmo Small
The main advantage of trading using opposite Prudential Jennison and Gmo Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Gmo Small 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 Gmo Small will offset losses from the drop in Gmo Small's long position.| Prudential Jennison vs. Gmo Small Cap | Prudential Jennison vs. Kinetics Small Cap | Prudential Jennison vs. Artisan Small Cap | Prudential Jennison vs. Qs Small Capitalization |
| Gmo Small vs. Putnam Equity Income | Gmo Small vs. Putnam Growth Opportunities | Gmo Small vs. HUMANA INC | Gmo Small vs. Aquagold International |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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