Correlation Between Fidelity Managed and Prudential Jennison

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

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

Diversification Opportunities for Fidelity Managed and Prudential Jennison

0.63

Correlation Coefficient

Fidelity Managed  Prudential Jennison

Poor diversification

The 3 months correlation between Fidelity and Prudential is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Managed Retirement and Prudential Jennison Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Fidelity Managed 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 Fidelity Managed Retirement 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 Fidelity Managed i.e., Fidelity Managed and Prudential Jennison go up and down completely randomly.

Pair Corralation between Fidelity Managed and Prudential Jennison

Assuming the 90 days horizon Fidelity Managed is expected to generate 1.72 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Fidelity Managed Retirement is 2.61 times less risky than Prudential Jennison. It trades about 0.09 of its potential returns per unit of risk. Prudential Jennison International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,366  in Prudential Jennison International on September 20, 2024 and sell it today you would earn a total of  778.00  from holding Prudential Jennison International or generate 32.88% return on investment over 90 days.

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

Fidelity Managed Retirement  vs.  Prudential Jennison Internatio

Fidelity Managed Ret

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Fidelity Managed and Prudential Jennison

The main advantage of trading using opposite Fidelity Managed and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Managed 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 Fidelity Managed Retirement 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.