Correlation Between Jensen Portfolio and Sound Shore
Can any of the company-specific risk be diversified away by investing in both Jensen Portfolio and Sound Shore 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 Sound Shore 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 Sound Shore Fund, you can compare the effects of market volatilities on Jensen Portfolio and Sound Shore 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 Sound Shore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jensen Portfolio and Sound Shore.
Diversification Opportunities for Jensen Portfolio and Sound Shore
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Jensen and Sound is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding The Jensen Portfolio and Sound Shore Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Shore Fund 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 Sound Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Shore Fund has no effect on the direction of Jensen Portfolio i.e., Jensen Portfolio and Sound Shore go up and down completely randomly.
Pair Corralation between Jensen Portfolio and Sound Shore
Assuming the 90 days horizon The Jensen Portfolio is expected to under-perform the Sound Shore. In addition to that, Jensen Portfolio is 3.15 times more volatile than Sound Shore Fund. It trades about -0.12 of its total potential returns per unit of risk. Sound Shore Fund is currently generating about 0.45 per unit of volatility. If you would invest 4,706 in Sound Shore Fund on September 3, 2024 and sell it today you would earn a total of 324.00 from holding Sound Shore Fund or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Jensen Portfolio vs. Sound Shore Fund
Performance |
| Timeline |
| Jensen Portfolio |
| Sound Shore Fund |
Jensen Portfolio and Sound Shore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jensen Portfolio and Sound Shore
The main advantage of trading using opposite Jensen Portfolio and Sound Shore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jensen Portfolio position performs unexpectedly, Sound Shore 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 Sound Shore will offset losses from the drop in Sound Shore's long position.| Jensen Portfolio vs. Royce Opportunity Fund | Jensen Portfolio vs. Ultramid Cap Profund Ultramid Cap | Jensen Portfolio vs. Amg River Road | Jensen Portfolio vs. Heartland Value Plus |
| Sound Shore vs. Dreyfusstandish Global Fixed | Sound Shore vs. Legg Mason Global | Sound Shore vs. Dreyfusstandish Global Fixed | Sound Shore vs. Ab Global Real |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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