Correlation Between Prudential Corporate and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Prudential Corporate and Prudential Jennison 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 Corporate and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Porate Bond and Prudential Jennison Mid Cap, you can compare the effects of market volatilities on Prudential Corporate and Prudential Jennison 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 Corporate with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Corporate and Prudential Jennison.
Diversification Opportunities for Prudential Corporate and Prudential Jennison
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prudential and Prudential is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Porate Bond and Prudential Jennison Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison Mid and Prudential Corporate 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 Porate Bond are associated (or correlated) with Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison Mid has no effect on the direction of Prudential Corporate i.e., Prudential Corporate and Prudential Jennison go up and down completely randomly.
Pair Corralation between Prudential Corporate and Prudential Jennison
Assuming the 90 days horizon Prudential Corporate is expected to generate 5.84 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Prudential Porate Bond is 2.49 times less risky than Prudential Jennison. It trades about 0.18 of its potential returns per unit of risk. Prudential Jennison Mid Cap is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 1,559 in Prudential Jennison Mid Cap on September 2, 2024 and sell it today you would earn a total of 152.00 from holding Prudential Jennison Mid Cap or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Porate Bond vs. Prudential Jennison Mid Cap
Performance |
| Timeline |
| Prudential Porate Bond |
| Prudential Jennison Mid |
Prudential Corporate and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Corporate and Prudential Jennison
The main advantage of trading using opposite Prudential Corporate and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Corporate position performs unexpectedly, Prudential Jennison 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 Prudential Jennison will offset losses from the drop in Prudential Jennison's long position.| Prudential Corporate vs. Ab Bond Inflation | Prudential Corporate vs. Ab Bond Inflation | Prudential Corporate vs. Western Asset Inflation | Prudential Corporate vs. Blackrock Inflation Protected |
| Prudential Jennison vs. Western Asset Inflation | Prudential Jennison vs. Cref Inflation Linked Bond | Prudential Jennison vs. Aqr Managed Futures | Prudential Jennison vs. Blackrock Inflation Protected |
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.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |