Correlation Between Prudential Jennison and American Growth
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and American Growth 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 Prudential Jennison and American Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Jennison International and American Growth Fund, you can compare the effects of market volatilities on Prudential Jennison and American Growth 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 Prudential Jennison with a short position of American Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and American Growth.
Diversification Opportunities for Prudential Jennison and American Growth
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prudential and American is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Internatio and American Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Growth and Prudential Jennison 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 Prudential Jennison International are associated (or correlated) with American Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Growth has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and American Growth go up and down completely randomly.
Pair Corralation between Prudential Jennison and American Growth
Assuming the 90 days horizon Prudential Jennison International is expected to generate 1.05 times more return on investment than American Growth. However, Prudential Jennison is 1.05 times more volatile than American Growth Fund. It trades about -0.15 of its potential returns per unit of risk. American Growth Fund is currently generating about -0.18 per unit of risk. If you would invest 3,183 in Prudential Jennison International on October 10, 2024 and sell it today you would lose (94.00) from holding Prudential Jennison International or give up 2.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Jennison Internatio vs. American Growth Fund
Performance |
| Timeline |
| Prudential Jennison |
| American Growth |
Prudential Jennison and American Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and American Growth
The main advantage of trading using opposite Prudential Jennison and American Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, American Growth 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 American Growth will offset losses from the drop in American Growth's long position.| Prudential Jennison vs. Tax Managed Large Cap | Prudential Jennison vs. Nasdaq 100 Profund Nasdaq 100 | Prudential Jennison vs. Versatile Bond Portfolio | Prudential Jennison vs. Alternative Asset Allocation |
| American Growth vs. American Growth Fund | American Growth vs. American Growth Fund | American Growth vs. American Growth Fund | American Growth vs. Prudential Jennison International |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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