Correlation Between Jennison Natural and Virtus Emerging

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Can any of the company-specific risk be diversified away by investing in both Jennison Natural and Virtus Emerging 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 Virtus Emerging 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 Virtus Emerging Markets, you can compare the effects of market volatilities on Jennison Natural and Virtus Emerging 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 Virtus Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jennison Natural and Virtus Emerging.

Diversification Opportunities for Jennison Natural and Virtus Emerging

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Jennison and Virtus is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Jennison Natural Resources and Virtus Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Emerging Markets 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 Virtus Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Emerging Markets has no effect on the direction of Jennison Natural i.e., Jennison Natural and Virtus Emerging go up and down completely randomly.

Pair Corralation between Jennison Natural and Virtus Emerging

Assuming the 90 days horizon Jennison Natural Resources is expected to generate 1.3 times more return on investment than Virtus Emerging. However, Jennison Natural is 1.3 times more volatile than Virtus Emerging Markets. It trades about 0.08 of its potential returns per unit of risk. Virtus Emerging Markets is currently generating about 0.01 per unit of risk. If you would invest  3,978  in Jennison Natural Resources on September 12, 2024 and sell it today you would earn a total of  198.00  from holding Jennison Natural Resources or generate 4.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Jennison Natural Resources  vs.  Virtus Emerging Markets

 Performance 
       Timeline  
Jennison Natural Res 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Jennison Natural Resources are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Jennison Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Virtus Emerging Markets 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Virtus Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Virtus Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jennison Natural and Virtus Emerging Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jennison Natural and Virtus Emerging

The main advantage of trading using opposite Jennison Natural and Virtus Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jennison Natural position performs unexpectedly, Virtus Emerging 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 Virtus Emerging will offset losses from the drop in Virtus Emerging's long position.
The idea behind Jennison Natural Resources and Virtus Emerging Markets pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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