Correlation Between Prudential Jennison and Maryland Tax-free
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Maryland Tax-free 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 Prudential Jennison and Maryland Tax-free into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Jennison Servative and Maryland Tax Free Bond, you can compare the effects of market volatilities on Prudential Jennison and Maryland Tax-free 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 Maryland Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Maryland Tax-free.
Diversification Opportunities for Prudential Jennison and Maryland Tax-free
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and Maryland is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Servative and Maryland Tax Free Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maryland Tax Free 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 Servative are associated (or correlated) with Maryland Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maryland Tax Free has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Maryland Tax-free go up and down completely randomly.
Pair Corralation between Prudential Jennison and Maryland Tax-free
Assuming the 90 days horizon Prudential Jennison Servative is expected to generate 6.14 times more return on investment than Maryland Tax-free. However, Prudential Jennison is 6.14 times more volatile than Maryland Tax Free Bond. It trades about 0.03 of its potential returns per unit of risk. Maryland Tax Free Bond is currently generating about 0.1 per unit of risk. If you would invest 1,792 in Prudential Jennison Servative on November 3, 2024 and sell it today you would earn a total of 151.00 from holding Prudential Jennison Servative or generate 8.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Jennison Servative vs. Maryland Tax Free Bond
Performance |
| Timeline |
| Prudential Jennison |
| Maryland Tax Free |
Prudential Jennison and Maryland Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Maryland Tax-free
The main advantage of trading using opposite Prudential Jennison and Maryland Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Maryland Tax-free 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 Maryland Tax-free will offset losses from the drop in Maryland Tax-free's long position.| Prudential Jennison vs. Calvert Developed Market | Prudential Jennison vs. Ashmore Emerging Markets | Prudential Jennison vs. Franklin Emerging Market | Prudential Jennison vs. Federated Emerging Market |
| Maryland Tax-free vs. Dreyfusstandish Global Fixed | Maryland Tax-free vs. Rbc Bluebay Emerging | Maryland Tax-free vs. Intermediate Term Bond Fund | Maryland Tax-free vs. Ft 7934 Corporate |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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