Correlation Between Ab Small and Jennison Natural
Can any of the company-specific risk be diversified away by investing in both Ab Small and Jennison Natural 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 Ab Small and Jennison Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Jennison Natural Resources, you can compare the effects of market volatilities on Ab Small and Jennison Natural 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 Ab Small with a short position of Jennison Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Jennison Natural.
Diversification Opportunities for Ab Small and Jennison Natural
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between QUAIX and Jennison is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Jennison Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jennison Natural Res and Ab Small 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 Ab Small Cap are associated (or correlated) with Jennison Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jennison Natural Res has no effect on the direction of Ab Small i.e., Ab Small and Jennison Natural go up and down completely randomly.
Pair Corralation between Ab Small and Jennison Natural
Assuming the 90 days horizon Ab Small Cap is expected to generate 1.11 times more return on investment than Jennison Natural. However, Ab Small is 1.11 times more volatile than Jennison Natural Resources. It trades about 0.11 of its potential returns per unit of risk. Jennison Natural Resources is currently generating about -0.03 per unit of risk. If you would invest 7,481 in Ab Small Cap on November 4, 2024 and sell it today you would earn a total of 193.00 from holding Ab Small Cap or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Jennison Natural Resources
Performance |
| Timeline |
| Ab Small Cap |
| Jennison Natural Res |
Ab Small and Jennison Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Jennison Natural
The main advantage of trading using opposite Ab Small and Jennison Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Jennison Natural 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 Jennison Natural will offset losses from the drop in Jennison Natural's long position.| Ab Small vs. Mid Cap Growth Profund | Ab Small vs. Small Cap Value | Ab Small vs. Applied Finance Explorer | Ab Small vs. Lsv Small Cap |
| Jennison Natural vs. Angel Oak Multi Strategy | Jennison Natural vs. Morgan Stanley Emerging | Jennison Natural vs. Artisan Developing World | Jennison Natural vs. Federated Emerging Market |
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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