Correlation Between Biotechnology Fund and Jennison Natural
Can any of the company-specific risk be diversified away by investing in both Biotechnology Fund 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 Biotechnology Fund and Jennison Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biotechnology Fund Class and Jennison Natural Resources, you can compare the effects of market volatilities on Biotechnology Fund 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 Biotechnology Fund with a short position of Jennison Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biotechnology Fund and Jennison Natural.
Diversification Opportunities for Biotechnology Fund and Jennison Natural
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Biotechnology and Jennison is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Biotechnology Fund Class 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 Biotechnology Fund 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 Biotechnology Fund Class 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 Biotechnology Fund i.e., Biotechnology Fund and Jennison Natural go up and down completely randomly.
Pair Corralation between Biotechnology Fund and Jennison Natural
Assuming the 90 days horizon Biotechnology Fund Class is expected to under-perform the Jennison Natural. In addition to that, Biotechnology Fund is 1.35 times more volatile than Jennison Natural Resources. It trades about -0.04 of its total potential returns per unit of risk. Jennison Natural Resources is currently generating about 0.03 per unit of volatility. If you would invest 4,149 in Jennison Natural Resources on September 13, 2024 and sell it today you would earn a total of 27.00 from holding Jennison Natural Resources or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biotechnology Fund Class vs. Jennison Natural Resources
Performance |
| Timeline |
| Biotechnology Fund Class |
| Jennison Natural Res |
Biotechnology Fund and Jennison Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biotechnology Fund and Jennison Natural
The main advantage of trading using opposite Biotechnology Fund and Jennison Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biotechnology Fund 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.| Biotechnology Fund vs. Kinetics Market Opportunities | Biotechnology Fund vs. Ep Emerging Markets | Biotechnology Fund vs. Investec Emerging Markets | Biotechnology Fund vs. Pnc Emerging Markets |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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