Correlation Between Prudential Jennison and Eaton Vance

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

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

Diversification Opportunities for Prudential Jennison and Eaton Vance

0.9

Correlation Coefficient

Prudential Jennison  Eaton Vance

Almost no diversification

The 3 months correlation between Prudential and Eaton is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Financial and Eaton Vance Atlanta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Atlanta and Prudential Jennison 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 Prudential Jennison Financial are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Atlanta has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Eaton Vance go up and down completely randomly.

Pair Corralation between Prudential Jennison and Eaton Vance

Assuming the 90 days horizon Prudential Jennison Financial is expected to generate 1.2 times more return on investment than Eaton Vance. However, Prudential Jennison is 1.2 times more volatile than Eaton Vance Atlanta. It trades about 0.16 of its potential returns per unit of risk. Eaton Vance Atlanta is currently generating about 0.1 per unit of risk. If you would invest  1,843  in Prudential Jennison Financial on September 4, 2024 and sell it today you would earn a total of  865.00  from holding Prudential Jennison Financial or generate 46.93% return on investment over 90 days.

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

Prudential Jennison Financial  vs.  Eaton Vance Atlanta

Prudential Jennison

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Jennison Financial are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Prudential Jennison showed solid returns over the last few months and may actually be approaching a breakup point.

Eaton Vance Atlanta

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Prudential Jennison and Eaton Vance

The main advantage of trading using opposite Prudential Jennison and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Eaton Vance 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 Eaton Vance will offset losses from the drop in Eaton Vance's long position.

The idea behind Prudential Jennison Financial and Eaton Vance Atlanta 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.