Correlation Between Pgim Jennison and First Trust
Can any of the company-specific risk be diversified away by investing in both Pgim Jennison and First Trust 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 Pgim Jennison and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pgim Jennison Diversified and First Trust Preferred, you can compare the effects of market volatilities on Pgim Jennison and First Trust 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 Pgim Jennison with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pgim Jennison and First Trust.
Diversification Opportunities for Pgim Jennison and First Trust
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pgim and First is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Jennison Diversified and First Trust Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Preferred and Pgim 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 Pgim Jennison Diversified are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Preferred has no effect on the direction of Pgim Jennison i.e., Pgim Jennison and First Trust go up and down completely randomly.
Pair Corralation between Pgim Jennison and First Trust
Assuming the 90 days horizon Pgim Jennison Diversified is expected to generate 2.82 times more return on investment than First Trust. However, Pgim Jennison is 2.82 times more volatile than First Trust Preferred. It trades about 0.12 of its potential returns per unit of risk. First Trust Preferred is currently generating about 0.07 per unit of risk. If you would invest 1,162 in Pgim Jennison Diversified on September 5, 2024 and sell it today you would earn a total of 1,022 from holding Pgim Jennison Diversified or generate 87.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pgim Jennison Diversified vs. First Trust Preferred
Performance |
| Timeline |
| Pgim Jennison Diversified |
| First Trust Preferred |
Pgim Jennison and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pgim Jennison and First Trust
The main advantage of trading using opposite Pgim Jennison and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pgim Jennison position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Pgim Jennison vs. Prudential Jennison International | Pgim Jennison vs. Prudential Jennison International | Pgim Jennison vs. Pgim Jennison International | Pgim Jennison vs. Pgim Jennison International |
| First Trust vs. First Trust Managed | First Trust vs. Franklin Templeton Multi Asset | First Trust vs. First Trust Short | First Trust vs. First Trust Short |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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