Correlation Between Jennison Natural and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Jennison Natural and Metropolitan West 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 Metropolitan West 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 Metropolitan West Investment, you can compare the effects of market volatilities on Jennison Natural and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jennison Natural and Metropolitan West.
Diversification Opportunities for Jennison Natural and Metropolitan West
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jennison and Metropolitan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Jennison Natural Resources and Metropolitan West Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West 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 Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West has no effect on the direction of Jennison Natural i.e., Jennison Natural and Metropolitan West go up and down completely randomly.
Pair Corralation between Jennison Natural and Metropolitan West
Assuming the 90 days horizon Jennison Natural Resources is expected to generate 3.86 times more return on investment than Metropolitan West. However, Jennison Natural is 3.86 times more volatile than Metropolitan West Investment. It trades about 0.09 of its potential returns per unit of risk. Metropolitan West Investment is currently generating about 0.06 per unit of risk. If you would invest 4,157 in Jennison Natural Resources on August 31, 2024 and sell it today you would earn a total of 79.00 from holding Jennison Natural Resources or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jennison Natural Resources vs. Metropolitan West Investment
Performance |
| Timeline |
| Jennison Natural Res |
| Metropolitan West |
Jennison Natural and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jennison Natural and Metropolitan West
The main advantage of trading using opposite Jennison Natural and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jennison Natural position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Jennison Natural vs. Wasatch Global Opportunities | Jennison Natural vs. Rbc Global Opportunities | Jennison Natural vs. T Rowe Price | Jennison Natural vs. Us Global Investors |
| Metropolitan West vs. World Energy Fund | Metropolitan West vs. Jennison Natural Resources | Metropolitan West vs. Oil Gas Ultrasector | Metropolitan West vs. Dreyfus 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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