Correlation Between Absolute Convertible and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible 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 Absolute Convertible and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Prudential Jennison International, you can compare the effects of market volatilities on Absolute Convertible 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 Absolute Convertible with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Prudential Jennison.
Diversification Opportunities for Absolute Convertible and Prudential Jennison
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Absolute and Prudential is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Prudential Jennison Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Absolute Convertible 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 Absolute Convertible Arbitrage 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 Absolute Convertible i.e., Absolute Convertible and Prudential Jennison go up and down completely randomly.
Pair Corralation between Absolute Convertible and Prudential Jennison
Assuming the 90 days horizon Absolute Convertible is expected to generate 1.29 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 12.61 times less risky than Prudential Jennison. It trades about 0.44 of its potential returns per unit of risk. Prudential Jennison International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,338 in Prudential Jennison International on May 31, 2025 and sell it today you would earn a total of 72.00 from holding Prudential Jennison International or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Prudential Jennison Internatio
Performance |
| Timeline |
| Absolute Convertible |
| Prudential Jennison |
Absolute Convertible and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Prudential Jennison
The main advantage of trading using opposite Absolute Convertible and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible 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.| Absolute Convertible vs. Lord Abbett Short | Absolute Convertible vs. City National Rochdale | Absolute Convertible vs. Federated High Yield | Absolute Convertible vs. Dunham High Yield |
| Prudential Jennison vs. Fidelity Capital Income | Prudential Jennison vs. Payden High Income | Prudential Jennison vs. City National Rochdale | Prudential Jennison vs. Ab High Income |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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