Correlation Between Capital World and Pgim Jennison
Can any of the company-specific risk be diversified away by investing in both Capital World and Pgim 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 Capital World and Pgim Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Growth and Pgim Jennison Global, you can compare the effects of market volatilities on Capital World and Pgim 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 Capital World with a short position of Pgim Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Pgim Jennison.
Diversification Opportunities for Capital World and Pgim Jennison
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Capital and Pgim is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth and Pgim Jennison Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Global and Capital World 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 Capital World Growth are associated (or correlated) with Pgim Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim Jennison Global has no effect on the direction of Capital World i.e., Capital World and Pgim Jennison go up and down completely randomly.
Pair Corralation between Capital World and Pgim Jennison
Assuming the 90 days horizon Capital World Growth is expected to generate 0.61 times more return on investment than Pgim Jennison. However, Capital World Growth is 1.64 times less risky than Pgim Jennison. It trades about -0.16 of its potential returns per unit of risk. Pgim Jennison Global is currently generating about -0.18 per unit of risk. If you would invest 6,393 in Capital World Growth on January 19, 2024 and sell it today you would lose (145.00) from holding Capital World Growth or give up 2.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Growth vs. Pgim Jennison Global
Performance |
| Timeline |
| Capital World Growth |
| Pgim Jennison Global |
Capital World and Pgim Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Pgim Jennison
The main advantage of trading using opposite Capital World and Pgim Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World position performs unexpectedly, Pgim 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 Pgim Jennison will offset losses from the drop in Pgim Jennison's long position.| Capital World vs. American Funds Capital | Capital World vs. American Funds Capital | Capital World vs. Capital World Growth | Capital World vs. Capital World Growth |
| Pgim Jennison vs. American Funds New | Pgim Jennison vs. American Funds New | Pgim Jennison vs. New Perspective Fund | Pgim Jennison vs. New Perspective Fund |
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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