Correlation Between Touchstone Small and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Touchstone Small 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 Touchstone Small and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Small Cap and Prudential Jennison Emerging, you can compare the effects of market volatilities on Touchstone Small 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 Touchstone Small with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Prudential Jennison.
Diversification Opportunities for Touchstone Small and Prudential Jennison
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Touchstone and Prudential is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Prudential Jennison Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Touchstone Small 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 Touchstone Small Cap 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 Touchstone Small i.e., Touchstone Small and Prudential Jennison go up and down completely randomly.
Pair Corralation between Touchstone Small and Prudential Jennison
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 0.9 times more return on investment than Prudential Jennison. However, Touchstone Small Cap is 1.11 times less risky than Prudential Jennison. It trades about -0.31 of its potential returns per unit of risk. Prudential Jennison Emerging is currently generating about -0.31 per unit of risk. If you would invest 4,045 in Touchstone Small Cap on October 16, 2024 and sell it today you would lose (265.00) from holding Touchstone Small Cap or give up 6.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Prudential Jennison Emerging
Performance |
| Timeline |
| Touchstone Small Cap |
| Prudential Jennison |
Touchstone Small and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Prudential Jennison
The main advantage of trading using opposite Touchstone Small and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small 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.| Touchstone Small vs. Boston Partners Small | Touchstone Small vs. Lsv Small Cap | Touchstone Small vs. Heartland Value Plus | Touchstone Small vs. William Blair Small |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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