Correlation Between Prudential Jennison and 70082LAB3
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By analyzing existing cross correlation between Prudential Jennison Equity and US70082LAB36, you can compare the effects of market volatilities on Prudential Jennison and 70082LAB3 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 Prudential Jennison with a short position of 70082LAB3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and 70082LAB3.
Diversification Opportunities for Prudential Jennison and 70082LAB3
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prudential and 70082LAB3 is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Equity and US70082LAB36 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US70082LAB36 and Prudential Jennison 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 Prudential Jennison Equity are associated (or correlated) with 70082LAB3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US70082LAB36 has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and 70082LAB3 go up and down completely randomly.
Pair Corralation between Prudential Jennison and 70082LAB3
Assuming the 90 days horizon Prudential Jennison Equity is expected to generate 0.35 times more return on investment than 70082LAB3. However, Prudential Jennison Equity is 2.88 times less risky than 70082LAB3. It trades about -0.06 of its potential returns per unit of risk. US70082LAB36 is currently generating about -0.23 per unit of risk. If you would invest 1,436 in Prudential Jennison Equity on August 29, 2024 and sell it today you would lose (11.00) from holding Prudential Jennison Equity or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 59.09% |
| Values | Daily Returns |
Prudential Jennison Equity vs. US70082LAB36
Performance |
| Timeline |
| Prudential Jennison |
| US70082LAB36 |
Prudential Jennison and 70082LAB3 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and 70082LAB3
The main advantage of trading using opposite Prudential Jennison and 70082LAB3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, 70082LAB3 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 70082LAB3 will offset losses from the drop in 70082LAB3's long position.The idea behind Prudential Jennison Equity and US70082LAB36 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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