Correlation Between Prudential Jennison and Fidelity Low

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

By analyzing existing cross correlation between Prudential Jennison Small and Fidelity Low Priced Stock, you can compare the effects of market volatilities on Prudential Jennison and Fidelity Low 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 Fidelity Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Fidelity Low.

Diversification Opportunities for Prudential Jennison and Fidelity Low

0.79

Correlation Coefficient

Prudential Jennison  Fidelity Low

Poor diversification

The 3 months correlation between Prudential and Fidelity is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Small and Fidelity Low Priced Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Low Priced 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 Small are associated (or correlated) with Fidelity Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Low Priced has no effect on the direction of Prudential Jennison i.e., Prudential Jennison and Fidelity Low go up and down completely randomly.

Pair Corralation between Prudential Jennison and Fidelity Low

Assuming the 90 days horizon Prudential Jennison is expected to generate 1.64 times less return on investment than Fidelity Low. In addition to that, Prudential Jennison is 1.37 times more volatile than Fidelity Low Priced Stock. It trades about 0.04 of its total potential returns per unit of risk. Fidelity Low Priced Stock is currently generating about 0.09 per unit of volatility. If you would invest  3,472  in Fidelity Low Priced Stock on February 1, 2024 and sell it today you would earn a total of  1,136  from holding Fidelity Low Priced Stock or generate 32.72% return on investment over 90 days.

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

Prudential Jennison Small  vs.  Fidelity Low Priced Stock

Prudential Jennison Small

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Jennison Small are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential Jennison is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Low Priced

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Low Priced Stock are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Fidelity Low is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prudential Jennison and Fidelity Low

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

The idea behind Prudential Jennison Small and Fidelity Low Priced Stock 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.

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 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..