Correlation Between Jennison Natural and Banks Ultrasector

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

By analyzing existing cross correlation between Jennison Natural Resources and Banks Ultrasector Profund, you can compare the effects of market volatilities on Jennison Natural and Banks Ultrasector 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 Jennison Natural with a short position of Banks Ultrasector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jennison Natural and Banks Ultrasector.

Diversification Opportunities for Jennison Natural and Banks Ultrasector

-0.04

Correlation Coefficient

Jennison Natural  Banks Ultrasector

Good diversification

The 3 months correlation between Jennison and Banks is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Jennison Natural Resources and Banks Ultrasector Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banks Ultrasector Profund and Jennison Natural 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 Jennison Natural Resources are associated (or correlated) with Banks Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banks Ultrasector Profund has no effect on the direction of Jennison Natural i.e., Jennison Natural and Banks Ultrasector go up and down completely randomly.

Pair Corralation between Jennison Natural and Banks Ultrasector

Assuming the 90 days horizon Jennison Natural is expected to generate 19.34 times less return on investment than Banks Ultrasector. But when comparing it to its historical volatility, Jennison Natural Resources is 2.07 times less risky than Banks Ultrasector. It trades about 0.0 of its potential returns per unit of risk. Banks Ultrasector Profund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,395  in Banks Ultrasector Profund on September 26, 2024 and sell it today you would earn a total of  1,691  from holding Banks Ultrasector Profund or generate 38.48% return on investment over 90 days.

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

Jennison Natural Resources  vs.  Banks Ultrasector Profund

Jennison Natural Res

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jennison Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Banks Ultrasector Profund

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Banks Ultrasector Profund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Banks Ultrasector may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jennison Natural and Banks Ultrasector

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

The idea behind Jennison Natural Resources and Banks Ultrasector Profund 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..