Correlation Between Jennison Natural and Western Asset
Can any of the company-specific risk be diversified away by investing in both Jennison Natural and Western Asset 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 Western Asset 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 Western Asset Adjustable, you can compare the effects of market volatilities on Jennison Natural and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jennison Natural and Western Asset.
Diversification Opportunities for Jennison Natural and Western Asset
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Jennison and Western is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Jennison Natural Resources and Western Asset Adjustable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Adjustable 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Adjustable has no effect on the direction of Jennison Natural i.e., Jennison Natural and Western Asset go up and down completely randomly.
Pair Corralation between Jennison Natural and Western Asset
Assuming the 90 days horizon Jennison Natural Resources is expected to generate 22.14 times more return on investment than Western Asset. However, Jennison Natural is 22.14 times more volatile than Western Asset Adjustable. It trades about 0.16 of its potential returns per unit of risk. Western Asset Adjustable is currently generating about 0.22 per unit of risk. If you would invest 4,135 in Jennison Natural Resources on September 3, 2024 and sell it today you would earn a total of 137.00 from holding Jennison Natural Resources or generate 3.31% 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. Western Asset Adjustable
Performance |
| Timeline |
| Jennison Natural Res |
| Western Asset Adjustable |
Jennison Natural and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jennison Natural and Western Asset
The main advantage of trading using opposite Jennison Natural and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jennison Natural position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Jennison Natural vs. Lord Abbett Small | Jennison Natural vs. Columbia Small Cap | Jennison Natural vs. Heartland Value Plus | Jennison Natural vs. Ab Discovery Value |
| Western Asset vs. World Energy Fund | Western Asset vs. Jennison Natural Resources | Western Asset vs. Salient Mlp Energy | Western Asset vs. Energy Basic Materials |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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