Correlation Between Jennison Natural and Fpa Flexible

Can any of the company-specific risk be diversified away by investing in both Jennison Natural and Fpa Flexible 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 Jennison Natural and Fpa Flexible into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jennison Natural Resources and Fpa Flexible Fixed, you can compare the effects of market volatilities on Jennison Natural and Fpa Flexible 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 Jennison Natural with a short position of Fpa Flexible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jennison Natural and Fpa Flexible.

Diversification Opportunities for Jennison Natural and Fpa Flexible

-0.47

Correlation Coefficient

Jennison Natural  Fpa Flexible

Very good diversification

The 3 months correlation between Jennison and Fpa is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Jennison Natural Resources and Fpa Flexible Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fpa Flexible Fixed and Jennison Natural 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 Jennison Natural Resources are associated (or correlated) with Fpa Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fpa Flexible Fixed has no effect on the direction of Jennison Natural i.e., Jennison Natural and Fpa Flexible go up and down completely randomly.

Pair Corralation between Jennison Natural and Fpa Flexible

Assuming the 90 days horizon Jennison Natural Resources is expected to under-perform the Fpa Flexible. In addition to that, Jennison Natural is 10.54 times more volatile than Fpa Flexible Fixed. It trades about -0.07 of its total potential returns per unit of risk. Fpa Flexible Fixed is currently generating about 0.15 per unit of volatility. If you would invest  998.00  in Fpa Flexible Fixed on January 15, 2025 and sell it today you would earn a total of  20.00  from holding Fpa Flexible Fixed or generate 2.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Jennison Natural Resources  vs.  Fpa Flexible Fixed

Jennison Natural Res

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jennison Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fpa Flexible Fixed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fpa Flexible Fixed are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Fpa Flexible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jennison Natural and Fpa Flexible

The main advantage of trading using opposite Jennison Natural and Fpa Flexible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jennison Natural position performs unexpectedly, Fpa Flexible 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 Fpa Flexible will offset losses from the drop in Fpa Flexible's long position.

The idea behind Jennison Natural Resources and Fpa Flexible Fixed 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.