Correlation Between Zacks All and Prudential Jennison

Can any of the company-specific risk be diversified away by investing in both Zacks All 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 Zacks All and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zacks All Cap Core and Prudential Jennison International, you can compare the effects of market volatilities on Zacks All 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 Zacks All with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zacks All and Prudential Jennison.

Diversification Opportunities for Zacks All and Prudential Jennison

-0.54

Correlation Coefficient

Zacks All  Prudential Jennison

Excellent diversification

The 3 months correlation between Zacks and Prudential is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Zacks All Cap Core and Prudential Jennison Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Zacks All 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 Zacks All Cap Core 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 Zacks All i.e., Zacks All and Prudential Jennison go up and down completely randomly.

Pair Corralation between Zacks All and Prudential Jennison

Assuming the 90 days horizon Zacks All Cap Core is expected to generate 0.74 times more return on investment than Prudential Jennison. However, Zacks All Cap Core is 1.35 times less risky than Prudential Jennison. It trades about 0.16 of its potential returns per unit of risk. Prudential Jennison International is currently generating about -0.03 per unit of risk. If you would invest  2,869  in Zacks All Cap Core on September 16, 2024 and sell it today you would earn a total of  207.00  from holding Zacks All Cap Core or generate 7.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Zacks All Cap Core  vs.  Prudential Jennison Internatio

Zacks All Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zacks All Cap Core are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Zacks All may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Prudential Jennison

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Jennison International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Prudential Jennison is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zacks All and Prudential Jennison

The main advantage of trading using opposite Zacks All and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zacks All 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.

The idea behind Zacks All Cap Core and Prudential Jennison International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.