Correlation Between Prudential Core and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Prudential Core 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 Core 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 E Bond and Prudential Jennison Global, you can compare the effects of market volatilities on Prudential Core 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 Core with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Core and Prudential Jennison.
Diversification Opportunities for Prudential Core and Prudential Jennison
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and Prudential is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Prudential E Bond and Prudential Jennison Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Prudential Core 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 E 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 has no effect on the direction of Prudential Core i.e., Prudential Core and Prudential Jennison go up and down completely randomly.
Pair Corralation between Prudential Core and Prudential Jennison
Assuming the 90 days horizon Prudential E Bond is expected to generate 0.24 times more return on investment than Prudential Jennison. However, Prudential E Bond is 4.16 times less risky than Prudential Jennison. It trades about 0.27 of its potential returns per unit of risk. Prudential Jennison Global is currently generating about -0.04 per unit of risk. If you would invest 859.00 in Prudential E Bond on November 28, 2024 and sell it today you would earn a total of 14.00 from holding Prudential E Bond or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Prudential E Bond vs. Prudential Jennison Global
Performance |
| Timeline |
| Prudential E Bond |
| Prudential Jennison |
Prudential Core and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Core and Prudential Jennison
The main advantage of trading using opposite Prudential Core and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Core 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 Core vs. Inverse Government Long | Prudential Core vs. Fidelity Series Government | Prudential Core vs. Us Government Securities | Prudential Core vs. Us Government Securities |
| Prudential Jennison vs. Franklin Dynatech Fund | Prudential Jennison vs. Prudential Total Return | Prudential Jennison vs. Lord Abbett Bond | Prudential Jennison vs. Prudential Jennison International |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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