Correlation Between Jensen and Floridienne
Can any of the company-specific risk be diversified away by investing in both Jensen and Floridienne 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 Jensen and Floridienne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jensen Group and Floridienne, you can compare the effects of market volatilities on Jensen and Floridienne 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 Jensen with a short position of Floridienne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jensen and Floridienne.
Diversification Opportunities for Jensen and Floridienne
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jensen and Floridienne is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Jensen Group and Floridienne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floridienne and Jensen 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 Jensen Group are associated (or correlated) with Floridienne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floridienne has no effect on the direction of Jensen i.e., Jensen and Floridienne go up and down completely randomly.
Pair Corralation between Jensen and Floridienne
Assuming the 90 days trading horizon Jensen Group is expected to generate 0.7 times more return on investment than Floridienne. However, Jensen Group is 1.44 times less risky than Floridienne. It trades about 0.07 of its potential returns per unit of risk. Floridienne is currently generating about 0.0 per unit of risk. If you would invest 2,576 in Jensen Group on September 4, 2024 and sell it today you would earn a total of 1,584 from holding Jensen Group or generate 61.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Jensen Group vs. Floridienne
Performance |
| Timeline |
| Jensen Group |
| Floridienne |
Jensen and Floridienne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jensen and Floridienne
The main advantage of trading using opposite Jensen and Floridienne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jensen position performs unexpectedly, Floridienne 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 Floridienne will offset losses from the drop in Floridienne's long position.The idea behind Jensen Group and Floridienne 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.| Floridienne vs. Brederode SA | Floridienne vs. Compagnie du Bois | Floridienne vs. Ackermans Van Haaren | Floridienne vs. Sofina Socit Anonyme |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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