Correlation Between Plug Power and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Plug Power 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 Plug Power and Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plug Power and Prudential Jennison International, you can compare the effects of market volatilities on Plug Power 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 Plug Power with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plug Power and Prudential Jennison.
Diversification Opportunities for Plug Power and Prudential Jennison
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Plug and Prudential is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Plug Power and Prudential Jennison Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Plug Power 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 Plug Power 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 Plug Power i.e., Plug Power and Prudential Jennison go up and down completely randomly.
Pair Corralation between Plug Power and Prudential Jennison
Given the investment horizon of 90 days Plug Power is expected to under-perform the Prudential Jennison. In addition to that, Plug Power is 4.63 times more volatile than Prudential Jennison International. It trades about -0.14 of its total potential returns per unit of risk. Prudential Jennison International is currently generating about -0.29 per unit of volatility. If you would invest 3,035 in Prudential Jennison International on January 16, 2024 and sell it today you would lose (152.00) from holding Prudential Jennison International or give up 5.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plug Power vs. Prudential Jennison Internatio
Performance |
| Timeline |
| Plug Power |
| Prudential Jennison |
Plug Power and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plug Power and Prudential Jennison
The main advantage of trading using opposite Plug Power and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plug Power 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.| Plug Power vs. Advanced Energy Industries | Plug Power vs. Energizer Holdings | Plug Power vs. Kimball Electronics | Plug Power vs. Hollysys Automation Technologies |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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