Correlation Between Jennison Natural and Multimanager Lifestyle
Can any of the company-specific risk be diversified away by investing in both Jennison Natural and Multimanager Lifestyle 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 Multimanager Lifestyle 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 Multimanager Lifestyle Moderate, you can compare the effects of market volatilities on Jennison Natural and Multimanager Lifestyle 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 Multimanager Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jennison Natural and Multimanager Lifestyle.
Diversification Opportunities for Jennison Natural and Multimanager Lifestyle
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Jennison and Multimanager is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Jennison Natural Resources and Multimanager Lifestyle Moderat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimanager Lifestyle 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 Multimanager Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimanager Lifestyle has no effect on the direction of Jennison Natural i.e., Jennison Natural and Multimanager Lifestyle go up and down completely randomly.
Pair Corralation between Jennison Natural and Multimanager Lifestyle
Assuming the 90 days horizon Jennison Natural is expected to generate 1.5 times less return on investment than Multimanager Lifestyle. In addition to that, Jennison Natural is 4.37 times more volatile than Multimanager Lifestyle Moderate. It trades about 0.03 of its total potential returns per unit of risk. Multimanager Lifestyle Moderate is currently generating about 0.23 per unit of volatility. If you would invest 1,258 in Multimanager Lifestyle Moderate on September 13, 2024 and sell it today you would earn a total of 15.00 from holding Multimanager Lifestyle Moderate or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Jennison Natural Resources vs. Multimanager Lifestyle Moderat
Performance |
| Timeline |
| Jennison Natural Res |
| Multimanager Lifestyle |
Jennison Natural and Multimanager Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jennison Natural and Multimanager Lifestyle
The main advantage of trading using opposite Jennison Natural and Multimanager Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jennison Natural position performs unexpectedly, Multimanager Lifestyle 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 Multimanager Lifestyle will offset losses from the drop in Multimanager Lifestyle's long position.| Jennison Natural vs. Valic Company I | Jennison Natural vs. Royce Opportunity Fund | Jennison Natural vs. Vanguard Small Cap Value | Jennison Natural vs. Omni Small Cap Value |
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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