Correlation Between Energy Services and Jennison Natural
Can any of the company-specific risk be diversified away by investing in both Energy Services 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 Energy Services and Jennison Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Services Fund and Jennison Natural Resources, you can compare the effects of market volatilities on Energy Services 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 Energy Services with a short position of Jennison Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Services and Jennison Natural.
Diversification Opportunities for Energy Services and Jennison Natural
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Energy and Jennison is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services Fund 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 Energy Services 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 Energy Services Fund 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 Energy Services i.e., Energy Services and Jennison Natural go up and down completely randomly.
Pair Corralation between Energy Services and Jennison Natural
Assuming the 90 days horizon Energy Services Fund is expected to under-perform the Jennison Natural. In addition to that, Energy Services is 1.64 times more volatile than Jennison Natural Resources. It trades about -0.15 of its total potential returns per unit of risk. Jennison Natural Resources is currently generating about -0.07 per unit of volatility. If you would invest 3,949 in Jennison Natural Resources on January 15, 2025 and sell it today you would lose (237.00) from holding Jennison Natural Resources or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Services Fund vs. Jennison Natural Resources
Performance |
| Timeline |
| Energy Services |
| Jennison Natural Res |
Energy Services and Jennison Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Services and Jennison Natural
The main advantage of trading using opposite Energy Services and Jennison Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Services 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.| Energy Services vs. Energy Fund Investor | Energy Services vs. Basic Materials Fund | Energy Services vs. Electronics Fund Investor | Energy Services vs. Health Care Fund |
| Jennison Natural vs. Dana Large Cap | Jennison Natural vs. Pace Large Value | Jennison Natural vs. Large Cap Fund | Jennison Natural vs. Dodge Cox Stock |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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