Correlation Between Prudential Jennison and Baron Health
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Baron Health 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 Baron Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Jennison Global and Baron Health Care, you can compare the effects of market volatilities on Prudential Jennison and Baron Health 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 Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Baron Health.
Diversification Opportunities for Prudential Jennison and Baron Health
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and Baron is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Global and Baron Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Health Care 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 Global are associated (or correlated) with Baron Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Health Care has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Baron Health go up and down completely randomly.
Pair Corralation between Prudential Jennison and Baron Health
Assuming the 90 days horizon Prudential Jennison Global is expected to generate 0.8 times more return on investment than Baron Health. However, Prudential Jennison Global is 1.24 times less risky than Baron Health. It trades about 0.14 of its potential returns per unit of risk. Baron Health Care is currently generating about 0.03 per unit of risk. If you would invest 1,565 in Prudential Jennison Global on September 5, 2024 and sell it today you would earn a total of 191.00 from holding Prudential Jennison Global or generate 12.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Prudential Jennison Global vs. Baron Health Care
Performance |
Timeline |
Prudential Jennison |
Baron Health Care |
Prudential Jennison and Baron Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Prudential Jennison and Baron Health
The main advantage of trading using opposite Prudential Jennison and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Baron Health 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 Baron Health will offset losses from the drop in Baron Health's long position.Prudential Jennison vs. Baron Health Care | Prudential Jennison vs. Allianzgi Health Sciences | Prudential Jennison vs. Eventide Healthcare Life | Prudential Jennison vs. Alphacentric Lifesci Healthcare |
Baron Health vs. Baron Discovery Fund | Baron Health vs. Baron Global Advantage | Baron Health vs. Baron Real Estate | Baron Health vs. Baron Focused Growth |
Check out your portfolio center.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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