Correlation Between Putnman Retirement and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Putnman Retirement and Prudential Jennison 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 Putnman Retirement and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnman Retirement Ready and Prudential Jennison Growth, you can compare the effects of market volatilities on Putnman Retirement and Prudential Jennison 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 Putnman Retirement with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnman Retirement and Prudential Jennison.
Diversification Opportunities for Putnman Retirement and Prudential Jennison
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Putnman and Prudential is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Putnman Retirement Ready and Prudential Jennison Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Putnman Retirement 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 Putnman Retirement Ready are associated (or correlated) with Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison has no effect on the direction of Putnman Retirement i.e., Putnman Retirement and Prudential Jennison go up and down completely randomly.
Pair Corralation between Putnman Retirement and Prudential Jennison
Assuming the 90 days horizon Putnman Retirement is expected to generate 2.22 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Putnman Retirement Ready is 3.29 times less risky than Prudential Jennison. It trades about 0.1 of its potential returns per unit of risk. Prudential Jennison Growth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,237 in Prudential Jennison Growth on September 13, 2024 and sell it today you would earn a total of 593.00 from holding Prudential Jennison Growth or generate 9.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnman Retirement Ready vs. Prudential Jennison Growth
Performance |
| Timeline |
| Putnman Retirement Ready |
| Prudential Jennison |
Putnman Retirement and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnman Retirement and Prudential Jennison
The main advantage of trading using opposite Putnman Retirement and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnman Retirement position performs unexpectedly, Prudential Jennison 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 Prudential Jennison will offset losses from the drop in Prudential Jennison's long position.| Putnman Retirement vs. Putnam Equity Income | Putnman Retirement vs. Putnam Tax Exempt | Putnman Retirement vs. Putnam Floating Rate | Putnman Retirement vs. Putnam High Yield |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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