Correlation Between The Jensen and Jensen Global
Can any of the company-specific risk be diversified away by investing in both The Jensen and Jensen Global 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 The Jensen and Jensen Global 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 Jensen Global Quality, you can compare the effects of market volatilities on The Jensen and Jensen Global 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 The Jensen with a short position of Jensen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Jensen and Jensen Global.
Diversification Opportunities for The Jensen and Jensen Global
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between The and Jensen is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding The Jensen Portfolio and Jensen Global Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jensen Global Quality and The 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 The Jensen Portfolio are associated (or correlated) with Jensen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jensen Global Quality has no effect on the direction of The Jensen i.e., The Jensen and Jensen Global go up and down completely randomly.
Pair Corralation between The Jensen and Jensen Global
Assuming the 90 days horizon The Jensen is expected to generate 1.54 times less return on investment than Jensen Global. In addition to that, The Jensen is 1.14 times more volatile than Jensen Global Quality. It trades about 0.04 of its total potential returns per unit of risk. Jensen Global Quality is currently generating about 0.06 per unit of volatility. If you would invest 1,356 in Jensen Global Quality on August 26, 2024 and sell it today you would earn a total of 336.00 from holding Jensen Global Quality or generate 24.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Jensen Portfolio vs. Jensen Global Quality
Performance |
| Timeline |
| Jensen Portfolio |
| Jensen Global Quality |
The Jensen and Jensen Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Jensen and Jensen Global
The main advantage of trading using opposite The Jensen and Jensen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Jensen position performs unexpectedly, Jensen Global 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 Jensen Global will offset losses from the drop in Jensen Global's long position.| The Jensen vs. Bond Fund Of | The Jensen vs. Washington Mutual Investors | The Jensen vs. John Hancock Disciplined | The Jensen vs. Europacific Growth Fund |
| Jensen Global vs. The Jensen Portfolio | Jensen Global vs. The Jensen Portfolio | Jensen Global vs. The Jensen Portfolio | Jensen Global vs. The Jensen Portfolio |
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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