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 Equity 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

0.82

Correlation Coefficient

Prudential Jennison  Fidelity Low

Very poor diversification

The 3 months correlation between Prudential and Fidelity is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Equity 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 Equity 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 Equity is expected to under-perform the Fidelity Low. But the mutual fund apears to be less risky and, when comparing its historical volatility, Prudential Jennison Equity is 1.05 times less risky than Fidelity Low. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Fidelity Low Priced Stock is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  4,741  in Fidelity Low Priced Stock on February 1, 2024 and sell it today you would lose (133.00) from holding Fidelity Low Priced Stock or give up 2.81% of portfolio value over 90 days.

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

Prudential Jennison Equity  vs.  Fidelity Low Priced Stock

Prudential Jennison

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Jennison Equity are ranked lower than 1 (%) 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 Equity 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.