Correlation Between World Energy and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both World Energy 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 World Energy and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and Prudential Jennison International, you can compare the effects of market volatilities on World Energy 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 World Energy with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Prudential Jennison.
Diversification Opportunities for World Energy and Prudential Jennison
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between World and Prudential is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Prudential Jennison Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and World Energy 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 World Energy Fund 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 has no effect on the direction of World Energy i.e., World Energy and Prudential Jennison go up and down completely randomly.
Pair Corralation between World Energy and Prudential Jennison
Assuming the 90 days horizon World Energy Fund is expected to generate 1.16 times more return on investment than Prudential Jennison. However, World Energy is 1.16 times more volatile than Prudential Jennison International. It trades about -0.02 of its potential returns per unit of risk. Prudential Jennison International is currently generating about -0.15 per unit of risk. If you would invest 1,809 in World Energy Fund on September 4, 2025 and sell it today you would lose (13.00) from holding World Energy Fund or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Prudential Jennison Internatio
Performance |
| Timeline |
| World Energy |
| Prudential Jennison |
World Energy and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Prudential Jennison
The main advantage of trading using opposite World Energy and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy 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.| World Energy vs. Baron Health Care | World Energy vs. Putnam Global Health | World Energy vs. The Hartford Healthcare | World Energy vs. Alger Health Sciences |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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