Correlation Between Growth Fund and Prudential Jennison

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

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

Diversification Opportunities for Growth Fund and Prudential Jennison

0.99

Correlation Coefficient

Growth Fund  Prudential Jennison

No risk reduction

The 3 months correlation between Growth and Prudential is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Prudential Jennison Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Growth Fund 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 Growth Fund Of 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 Growth Fund i.e., Growth Fund and Prudential Jennison go up and down completely randomly.

Pair Corralation between Growth Fund and Prudential Jennison

Assuming the 90 days horizon Growth Fund Of is expected to generate 0.84 times more return on investment than Prudential Jennison. However, Growth Fund Of is 1.19 times less risky than Prudential Jennison. It trades about 0.23 of its potential returns per unit of risk. Prudential Jennison Growth is currently generating about 0.19 per unit of risk. If you would invest  7,255  in Growth Fund Of on September 4, 2024 and sell it today you would earn a total of  969.00  from holding Growth Fund Of or generate 13.36% return on investment over 90 days.

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

Growth Fund Of  vs.  Prudential Jennison Growth

Growth Fund

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Fund Of are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Growth Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Prudential Jennison

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Jennison Growth are ranked lower than 15 (%) 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 Growth Fund and Prudential Jennison

The main advantage of trading using opposite Growth Fund and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund 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 Growth Fund Of and Prudential Jennison Growth 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.