Correlation Between Jensen Portfolio and The Jensen
Can any of the company-specific risk be diversified away by investing in both Jensen Portfolio and The Jensen 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 Portfolio and The Jensen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Jensen Portfolio and The Jensen Portfolio, you can compare the effects of market volatilities on Jensen Portfolio and The Jensen 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 Portfolio with a short position of The Jensen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jensen Portfolio and The Jensen.
Diversification Opportunities for Jensen Portfolio and The Jensen
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Jensen and The is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding The Jensen Portfolio and The Jensen Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jensen Portfolio and Jensen Portfolio 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 The Jensen Portfolio are associated (or correlated) with The Jensen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jensen Portfolio has no effect on the direction of Jensen Portfolio i.e., Jensen Portfolio and The Jensen go up and down completely randomly.
Pair Corralation between Jensen Portfolio and The Jensen
Assuming the 90 days horizon The Jensen Portfolio is expected to generate 1.0 times more return on investment than The Jensen. However, The Jensen Portfolio is 1.0 times less risky than The Jensen. It trades about -0.12 of its potential returns per unit of risk. The Jensen Portfolio is currently generating about -0.12 per unit of risk. If you would invest 6,457 in The Jensen Portfolio on September 3, 2024 and sell it today you would lose (407.00) from holding The Jensen Portfolio or give up 6.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Jensen Portfolio vs. The Jensen Portfolio
Performance |
| Timeline |
| Jensen Portfolio |
| Jensen Portfolio |
Jensen Portfolio and The Jensen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jensen Portfolio and The Jensen
The main advantage of trading using opposite Jensen Portfolio and The Jensen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jensen Portfolio position performs unexpectedly, The Jensen 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 The Jensen will offset losses from the drop in The Jensen's long position.| Jensen Portfolio vs. Bond Fund Of | Jensen Portfolio vs. Washington Mutual Investors | Jensen Portfolio vs. John Hancock Disciplined | Jensen Portfolio vs. Europacific Growth Fund |
| The Jensen vs. The Jensen Portfolio | The Jensen vs. T Rowe Price | The Jensen vs. Champlain Mid Cap | The Jensen vs. Massachusetts Investors Growth |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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