Correlation Between New World and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both New World 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 New World and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New World Fund and Prudential Jennison Financial, you can compare the effects of market volatilities on New World 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 New World with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Prudential Jennison.
Diversification Opportunities for New World and Prudential Jennison
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Prudential is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Prudential Jennison Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and New World 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 New World Fund 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 New World i.e., New World and Prudential Jennison go up and down completely randomly.
Pair Corralation between New World and Prudential Jennison
Assuming the 90 days horizon New World Fund is expected to under-perform the Prudential Jennison. But the mutual fund apears to be less risky and, when comparing its historical volatility, New World Fund is 2.48 times less risky than Prudential Jennison. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Prudential Jennison Financial is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,527 in Prudential Jennison Financial on August 31, 2024 and sell it today you would earn a total of 226.00 from holding Prudential Jennison Financial or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New World Fund vs. Prudential Jennison Financial
Performance |
| Timeline |
| New World Fund |
| Prudential Jennison |
New World and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Prudential Jennison
The main advantage of trading using opposite New World and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World 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.| New World vs. Harbor Diversified International | New World vs. Shelton Emerging Markets | New World vs. Barings Emerging Markets | New World vs. Aqr Sustainable Long Short |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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