Correlation Between Prudential Qma and Prudential Jennison

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

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

Diversification Opportunities for Prudential Qma and Prudential Jennison

-0.45

Correlation Coefficient

Prudential Qma  Prudential Jennison

Very good diversification

The 3 months correlation between Prudential and Prudential is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Qma International 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 Prudential Qma 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 Qma International 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 Prudential Qma i.e., Prudential Qma and Prudential Jennison go up and down completely randomly.

Pair Corralation between Prudential Qma and Prudential Jennison

Assuming the 90 days horizon Prudential Qma is expected to generate 40.32 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Prudential Qma International is 1.2 times less risky than Prudential Jennison. It trades about 0.01 of its potential returns per unit of risk. Prudential Jennison Mid Cap is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,091  in Prudential Jennison Mid Cap on September 13, 2024 and sell it today you would earn a total of  259.00  from holding Prudential Jennison Mid Cap or generate 12.39% return on investment over 90 days.

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

Prudential Qma International  vs.  Prudential Jennison Mid Cap

Prudential Qma Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Qma International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Prudential Qma 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

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Jennison Mid Cap are ranked lower than 16 (%) 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 Prudential Qma and Prudential Jennison

The main advantage of trading using opposite Prudential Qma and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Qma 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 Prudential Qma International 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.