Correlation Between Jennison Natural and Focused International
Can any of the company-specific risk be diversified away by investing in both Jennison Natural and Focused International 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 Jennison Natural and Focused International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jennison Natural Resources and Focused International Growth, you can compare the effects of market volatilities on Jennison Natural and Focused International 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 Jennison Natural with a short position of Focused International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jennison Natural and Focused International.
Diversification Opportunities for Jennison Natural and Focused International
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Jennison and Focused is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Jennison Natural Resources and Focused International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focused International and Jennison Natural 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 Jennison Natural Resources are associated (or correlated) with Focused International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focused International has no effect on the direction of Jennison Natural i.e., Jennison Natural and Focused International go up and down completely randomly.
Pair Corralation between Jennison Natural and Focused International
Assuming the 90 days horizon Jennison Natural Resources is expected to generate 1.37 times more return on investment than Focused International. However, Jennison Natural is 1.37 times more volatile than Focused International Growth. It trades about 0.04 of its potential returns per unit of risk. Focused International Growth is currently generating about 0.02 per unit of risk. If you would invest 3,713 in Jennison Natural Resources on August 26, 2024 and sell it today you would earn a total of 598.00 from holding Jennison Natural Resources or generate 16.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jennison Natural Resources vs. Focused International Growth
Performance |
| Timeline |
| Jennison Natural Res |
| Focused International |
Jennison Natural and Focused International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jennison Natural and Focused International
The main advantage of trading using opposite Jennison Natural and Focused International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jennison Natural position performs unexpectedly, Focused International 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 Focused International will offset losses from the drop in Focused International's long position.| Jennison Natural vs. California Bond Fund | Jennison Natural vs. Morningstar Defensive Bond | Jennison Natural vs. T Rowe Price | Jennison Natural vs. T Rowe Price |
| Focused International vs. Jennison Natural Resources | Focused International vs. Short Oil Gas | Focused International vs. Franklin Natural Resources | Focused International vs. Icon Natural Resources |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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