Correlation Between Pgim Esg and Prudential Jennison

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

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

Diversification Opportunities for Pgim Esg and Prudential Jennison

0.63

Correlation Coefficient

Pgim Esg  Prudential Jennison

Poor diversification

The 3 months correlation between Pgim and Prudential is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Esg High and Prudential Jennison Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison Mid and Pgim Esg 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 Pgim Esg High 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 Mid has no effect on the direction of Pgim Esg i.e., Pgim Esg and Prudential Jennison go up and down completely randomly.

Pair Corralation between Pgim Esg and Prudential Jennison

Assuming the 90 days horizon Pgim Esg is expected to generate 15.94 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Pgim Esg High is 6.31 times less risky than Prudential Jennison. It trades about 0.09 of its potential returns per unit of risk. Prudential Jennison Mid Cap is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,103  in Prudential Jennison Mid Cap on September 14, 2024 and sell it today you would earn a total of  275.00  from holding Prudential Jennison Mid Cap or generate 13.08% return on investment over 90 days.

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

Pgim Esg High  vs.  Prudential Jennison Mid Cap

Pgim Esg High

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Esg High are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pgim Esg is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prudential Jennison Mid

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Jennison Mid Cap are ranked lower than 17 (%) 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 Pgim Esg and Prudential Jennison

The main advantage of trading using opposite Pgim Esg and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pgim Esg 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 Pgim Esg High and Prudential Jennison Mid Cap 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.