Correlation Between Small Cap and Pgim Jennison
Can any of the company-specific risk be diversified away by investing in both Small Cap and Pgim 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 Small Cap and Pgim Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Pgim Jennison Technology, you can compare the effects of market volatilities on Small Cap and Pgim 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 Small Cap with a short position of Pgim Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Pgim Jennison.
Diversification Opportunities for Small Cap and Pgim Jennison
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Small and Pgim is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Pgim Jennison Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Technology and Small Cap 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 Small Cap Stock are associated (or correlated) with Pgim Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim Jennison Technology has no effect on the direction of Small Cap i.e., Small Cap and Pgim Jennison go up and down completely randomly.
Pair Corralation between Small Cap and Pgim Jennison
Assuming the 90 days horizon Small Cap Stock is expected to generate 1.2 times more return on investment than Pgim Jennison. However, Small Cap is 1.2 times more volatile than Pgim Jennison Technology. It trades about 0.19 of its potential returns per unit of risk. Pgim Jennison Technology is currently generating about 0.13 per unit of risk. If you would invest 1,419 in Small Cap Stock on August 28, 2024 and sell it today you would earn a total of 94.00 from holding Small Cap Stock or generate 6.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Stock vs. Pgim Jennison Technology
Performance |
| Timeline |
| Small Cap Stock |
| Pgim Jennison Technology |
Small Cap and Pgim Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Pgim Jennison
The main advantage of trading using opposite Small Cap and Pgim Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Pgim 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 Pgim Jennison will offset losses from the drop in Pgim Jennison's long position.| Small Cap vs. Income Fund Income | Small Cap vs. Usaa Nasdaq 100 | Small Cap vs. Victory Diversified Stock | Small Cap vs. Intermediate Term Bond Fund |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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