Correlation Between City National and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both City National 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 City National and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City National Rochdale and Prudential Jennison Financial, you can compare the effects of market volatilities on City National 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 City National with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of City National and Prudential Jennison.
Diversification Opportunities for City National and Prudential Jennison
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between City and Prudential is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding City National Rochdale and Prudential Jennison Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and City National 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 City National Rochdale 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 City National i.e., City National and Prudential Jennison go up and down completely randomly.
Pair Corralation between City National and Prudential Jennison
Assuming the 90 days horizon City National Rochdale is expected to generate 0.14 times more return on investment than Prudential Jennison. However, City National Rochdale is 7.03 times less risky than Prudential Jennison. It trades about 0.05 of its potential returns per unit of risk. Prudential Jennison Financial is currently generating about 0.0 per unit of risk. If you would invest 1,982 in City National Rochdale on September 13, 2024 and sell it today you would earn a total of 2.00 from holding City National Rochdale or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
City National Rochdale vs. Prudential Jennison Financial
Performance |
| Timeline |
| City National Rochdale |
| Prudential Jennison |
City National and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City National and Prudential Jennison
The main advantage of trading using opposite City National and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City National 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.| City National vs. Deutsche Real Estate | City National vs. Short Real Estate | City National vs. Sa Real Estate | City National vs. Jhancock Real Estate |
| Prudential Jennison vs. Gabelli Convertible And | Prudential Jennison vs. Absolute Convertible Arbitrage | Prudential Jennison vs. Advent Claymore Convertible | Prudential Jennison vs. Virtus Convertible |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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