Correlation Between Pgim Jennison and Bridge Builder

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

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

Diversification Opportunities for Pgim Jennison and Bridge Builder

0.95

Correlation Coefficient

Pgim Jennison  Bridge Builder

Almost no diversification

The 3 months correlation between Pgim and Bridge is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Jennison Technology and Bridge Builder Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Builder Large and Pgim 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 Pgim Jennison Technology are associated (or correlated) with Bridge Builder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Builder Large has no effect on the direction of Pgim Jennison i.e., Pgim Jennison and Bridge Builder go up and down completely randomly.

Pair Corralation between Pgim Jennison and Bridge Builder

Assuming the 90 days horizon Pgim Jennison Technology is expected to generate 1.54 times more return on investment than Bridge Builder. However, Pgim Jennison is 1.54 times more volatile than Bridge Builder Large. It trades about 0.28 of its potential returns per unit of risk. Bridge Builder Large is currently generating about 0.33 per unit of risk. If you would invest  2,492  in Pgim Jennison Technology on September 5, 2024 and sell it today you would earn a total of  192.00  from holding Pgim Jennison Technology or generate 7.7% return on investment over 90 days.

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

Pgim Jennison Technology  vs.  Bridge Builder Large

Pgim Jennison Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Jennison Technology are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Pgim Jennison showed solid returns over the last few months and may actually be approaching a breakup point.

Bridge Builder Large

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bridge Builder Large are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Bridge Builder may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pgim Jennison and Bridge Builder

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

The idea behind Pgim Jennison Technology and Bridge Builder Large 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 Transaction History module to view history of all your transactions and understand their impact on performance.