Correlation Between Prudential Jennison and Ab Small
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison and Ab Small 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 Ab Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Jennison International and Ab Small Cap, you can compare the effects of market volatilities on Prudential Jennison and Ab Small 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 Ab Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Ab Small.
Diversification Opportunities for Prudential Jennison and Ab Small
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prudential and QUAIX is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Internatio and Ab Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Small Cap 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 International are associated (or correlated) with Ab Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Small Cap has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Ab Small go up and down completely randomly.
Pair Corralation between Prudential Jennison and Ab Small
Assuming the 90 days horizon Prudential Jennison is expected to generate 13.98 times less return on investment than Ab Small. But when comparing it to its historical volatility, Prudential Jennison International is 1.23 times less risky than Ab Small. It trades about 0.01 of its potential returns per unit of risk. Ab Small Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,649 in Ab Small Cap on September 13, 2024 and sell it today you would earn a total of 1,163 from holding Ab Small Cap or generate 17.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Prudential Jennison Internatio vs. Ab Small Cap
Performance |
Timeline |
Prudential Jennison |
Ab Small Cap |
Prudential Jennison and Ab Small Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Prudential Jennison and Ab Small
The main advantage of trading using opposite Prudential Jennison and Ab Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison position performs unexpectedly, Ab Small 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 Ab Small will offset losses from the drop in Ab Small's long position.Prudential Jennison vs. Jhancock Global Equity | Prudential Jennison vs. Ab Global Bond | Prudential Jennison vs. Alliancebernstein Global High | Prudential Jennison vs. Ab Global Real |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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