Correlation Between Vanguard Materials and Pgim Jennison
Can any of the company-specific risk be diversified away by investing in both Vanguard Materials 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 Vanguard Materials and Pgim Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Materials Index and Pgim Jennison Natural, you can compare the effects of market volatilities on Vanguard Materials 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 Vanguard Materials with a short position of Pgim Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Materials and Pgim Jennison.
Diversification Opportunities for Vanguard Materials and Pgim Jennison
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Pgim is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Materials Index and Pgim Jennison Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Natural and Vanguard Materials 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 Vanguard Materials Index 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 Natural has no effect on the direction of Vanguard Materials i.e., Vanguard Materials and Pgim Jennison go up and down completely randomly.
Pair Corralation between Vanguard Materials and Pgim Jennison
Assuming the 90 days horizon Vanguard Materials is expected to generate 1.09 times less return on investment than Pgim Jennison. But when comparing it to its historical volatility, Vanguard Materials Index is 1.33 times less risky than Pgim Jennison. It trades about 0.11 of its potential returns per unit of risk. Pgim Jennison Natural is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,487 in Pgim Jennison Natural on September 2, 2024 and sell it today you would earn a total of 348.00 from holding Pgim Jennison Natural or generate 6.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Materials Index vs. Pgim Jennison Natural
Performance |
| Timeline |
| Vanguard Materials Index |
| Pgim Jennison Natural |
Vanguard Materials and Pgim Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Materials and Pgim Jennison
The main advantage of trading using opposite Vanguard Materials and Pgim Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Materials 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.| Vanguard Materials vs. Vanguard Emerging Markets | Vanguard Materials vs. Vanguard Total International | Vanguard Materials vs. Vanguard Reit Index | Vanguard Materials vs. Vanguard Industrials Index |
| Pgim Jennison vs. Prudential Jennison International | Pgim Jennison vs. Prudential Jennison International | Pgim Jennison vs. Prudential Jennison International | Pgim Jennison vs. Prudential Short Duration |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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