Correlation Between Plumb Balanced and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Plumb Balanced and Prudential 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 Plumb Balanced and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plumb Balanced and Prudential Jennison International, you can compare the effects of market volatilities on Plumb Balanced and Prudential 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 Plumb Balanced with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plumb Balanced and Prudential Jennison.
Diversification Opportunities for Plumb Balanced and Prudential Jennison
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Plumb and Prudential is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Plumb Balanced and Prudential Jennison Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Plumb Balanced 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 Plumb Balanced are associated (or correlated) with Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison has no effect on the direction of Plumb Balanced i.e., Plumb Balanced and Prudential Jennison go up and down completely randomly.
Pair Corralation between Plumb Balanced and Prudential Jennison
Assuming the 90 days horizon Plumb Balanced is expected to generate 0.62 times more return on investment than Prudential Jennison. However, Plumb Balanced is 1.6 times less risky than Prudential Jennison. It trades about 0.09 of its potential returns per unit of risk. Prudential Jennison International is currently generating about 0.01 per unit of risk. If you would invest 3,774 in Plumb Balanced on September 2, 2024 and sell it today you would earn a total of 314.00 from holding Plumb Balanced or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plumb Balanced vs. Prudential Jennison Internatio
Performance |
| Timeline |
| Plumb Balanced |
| Prudential Jennison |
Plumb Balanced and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plumb Balanced and Prudential Jennison
The main advantage of trading using opposite Plumb Balanced and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plumb Balanced position performs unexpectedly, Prudential 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 Prudential Jennison will offset losses from the drop in Prudential Jennison's long position.| Plumb Balanced vs. Goldman Sachs Short Term | Plumb Balanced vs. Astor Longshort Fund | Plumb Balanced vs. Jhancock Short Duration | Plumb Balanced vs. Aqr Long Short Equity |
| Prudential Jennison vs. Aam Select Income | Prudential Jennison vs. Qs Large Cap | Prudential Jennison vs. Western Asset Municipal | Prudential Jennison vs. Bbh Partner Fund |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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