Correlation Between Payden Government and Pgim Jennison
Can any of the company-specific risk be diversified away by investing in both Payden Government and Pgim 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 Payden Government and Pgim Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Government Fund and Pgim Jennison Technology, you can compare the effects of market volatilities on Payden Government and Pgim 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 Payden Government with a short position of Pgim Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Government and Pgim Jennison.
Diversification Opportunities for Payden Government and Pgim Jennison
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Payden and Pgim is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund and Pgim Jennison Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Technology and Payden Government 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 Payden Government Fund are associated (or correlated) with Pgim Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim Jennison Technology has no effect on the direction of Payden Government i.e., Payden Government and Pgim Jennison go up and down completely randomly.
Pair Corralation between Payden Government and Pgim Jennison
Assuming the 90 days horizon Payden Government is expected to generate 9.76 times less return on investment than Pgim Jennison. But when comparing it to its historical volatility, Payden Government Fund is 8.15 times less risky than Pgim Jennison. It trades about 0.07 of its potential returns per unit of risk. Pgim Jennison Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,354 in Pgim Jennison Technology on November 5, 2024 and sell it today you would earn a total of 1,226 from holding Pgim Jennison Technology or generate 90.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Government Fund vs. Pgim Jennison Technology
Performance |
| Timeline |
| Payden Government |
| Pgim Jennison Technology |
Payden Government and Pgim Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Government and Pgim Jennison
The main advantage of trading using opposite Payden Government and Pgim Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Government position performs unexpectedly, Pgim 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 Pgim Jennison will offset losses from the drop in Pgim Jennison's long position.| Payden Government vs. Jhancock Diversified Macro | Payden Government vs. Stone Ridge Diversified | Payden Government vs. Global Diversified Income | Payden Government vs. Schwab Small Cap Index |
| Pgim Jennison vs. Blackstone Secured Lending | Pgim Jennison vs. 1919 Financial Services | Pgim Jennison vs. Prudential Financial Services | Pgim Jennison vs. Putnam Global Financials |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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