Correlation Between Jennison Natural and Federated Kaufmann
Can any of the company-specific risk be diversified away by investing in both Jennison Natural and Federated Kaufmann 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 Federated Kaufmann 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 Federated Kaufmann Fund, you can compare the effects of market volatilities on Jennison Natural and Federated Kaufmann 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 Federated Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jennison Natural and Federated Kaufmann.
Diversification Opportunities for Jennison Natural and Federated Kaufmann
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Jennison and Federated is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Jennison Natural Resources and Federated Kaufmann Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann 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 Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann has no effect on the direction of Jennison Natural i.e., Jennison Natural and Federated Kaufmann go up and down completely randomly.
Pair Corralation between Jennison Natural and Federated Kaufmann
Assuming the 90 days horizon Jennison Natural Resources is expected to generate 0.3 times more return on investment than Federated Kaufmann. However, Jennison Natural Resources is 3.29 times less risky than Federated Kaufmann. It trades about 0.03 of its potential returns per unit of risk. Federated Kaufmann Fund is currently generating about -0.17 per unit of risk. If you would invest 4,149 in Jennison Natural Resources on September 13, 2024 and sell it today you would earn a total of 27.00 from holding Jennison Natural Resources or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jennison Natural Resources vs. Federated Kaufmann Fund
Performance |
| Timeline |
| Jennison Natural Res |
| Federated Kaufmann |
Jennison Natural and Federated Kaufmann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jennison Natural and Federated Kaufmann
The main advantage of trading using opposite Jennison Natural and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jennison Natural position performs unexpectedly, Federated Kaufmann 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 Federated Kaufmann will offset losses from the drop in Federated Kaufmann'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 |
| Federated Kaufmann vs. Hennessy Technology Fund | Federated Kaufmann vs. Science Technology Fund | Federated Kaufmann vs. Vanguard Information Technology | Federated Kaufmann vs. Blackrock Science Technology |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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