Correlation Between Prudential Jennison and Plumb Balanced
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Plumb Balanced 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 Plumb Balanced 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 Plumb Balanced, you can compare the effects of market volatilities on Prudential Jennison and Plumb Balanced 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 Plumb Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Plumb Balanced.
Diversification Opportunities for Prudential Jennison and Plumb Balanced
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and Plumb is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Internatio and Plumb Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumb Balanced 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 Plumb Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumb Balanced has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Plumb Balanced go up and down completely randomly.
Pair Corralation between Prudential Jennison and Plumb Balanced
Assuming the 90 days horizon Prudential Jennison is expected to generate 8.67 times less return on investment than Plumb Balanced. In addition to that, Prudential Jennison is 1.6 times more volatile than Plumb Balanced. It trades about 0.01 of its total potential returns per unit of risk. Plumb Balanced is currently generating about 0.09 per unit of volatility. If you would invest 3,774 in Plumb Balanced on September 2, 2024 and sell it today you would earn a total of 314.00 from holding Plumb Balanced or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Jennison Internatio vs. Plumb Balanced
Performance |
| Timeline |
| Prudential Jennison |
| Plumb Balanced |
Prudential Jennison and Plumb Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Plumb Balanced
The main advantage of trading using opposite Prudential Jennison and Plumb Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Plumb Balanced 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 Plumb Balanced will offset losses from the drop in Plumb Balanced's long position.| Prudential Jennison vs. Aam Select Income | Prudential Jennison vs. Qs Large Cap | Prudential Jennison vs. Western Asset Municipal | Prudential Jennison vs. Bbh Partner Fund |
| Plumb Balanced vs. Goldman Sachs Short Term | Plumb Balanced vs. Astor Longshort Fund | Plumb Balanced vs. Jhancock Short Duration | Plumb Balanced vs. Aqr Long Short Equity |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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