Correlation Between Ab Flexfee and Prudential Jennison

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

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

Diversification Opportunities for Ab Flexfee and Prudential Jennison

-0.25

Correlation Coefficient

Ab Flexfee  Prudential Jennison

Very good diversification

The 3 months correlation between FFTYX and Prudential is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ab Flexfee Thematic and Prudential Jennison Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Ab Flexfee 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 Ab Flexfee Thematic 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 Ab Flexfee i.e., Ab Flexfee and Prudential Jennison go up and down completely randomly.

Pair Corralation between Ab Flexfee and Prudential Jennison

Assuming the 90 days horizon Ab Flexfee Thematic is expected to under-perform the Prudential Jennison. In addition to that, Ab Flexfee is 5.6 times more volatile than Prudential Jennison Financial. It trades about -0.24 of its total potential returns per unit of risk. Prudential Jennison Financial is currently generating about 0.0 per unit of volatility. If you would invest  2,666  in Prudential Jennison Financial on September 14, 2024 and sell it today you would lose (3.00) from holding Prudential Jennison Financial or give up 0.11% of portfolio value over 90 days.

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

Ab Flexfee Thematic  vs.  Prudential Jennison Financial

Ab Flexfee Thematic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Flexfee Thematic has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Prudential Jennison

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Jennison Financial are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Prudential Jennison may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ab Flexfee and Prudential Jennison

The main advantage of trading using opposite Ab Flexfee and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Flexfee 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 Ab Flexfee Thematic and Prudential Jennison Financial 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.