Correlation Between Mairs Power and The Jensen
Can any of the company-specific risk be diversified away by investing in both Mairs Power 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 Mairs Power and The Jensen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mairs Power Growth and The Jensen Portfolio, you can compare the effects of market volatilities on Mairs Power 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 Mairs Power with a short position of The Jensen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mairs Power and The Jensen.
Diversification Opportunities for Mairs Power and The Jensen
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mairs and The is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Mairs Power Growth and The Jensen Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jensen Portfolio and Mairs Power 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 Mairs Power Growth 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 Mairs Power i.e., Mairs Power and The Jensen go up and down completely randomly.
Pair Corralation between Mairs Power and The Jensen
Assuming the 90 days horizon Mairs Power Growth is expected to generate 1.0 times more return on investment than The Jensen. However, Mairs Power Growth is 1.0 times less risky than The Jensen. It trades about 0.1 of its potential returns per unit of risk. The Jensen Portfolio is currently generating about 0.04 per unit of risk. If you would invest 12,052 in Mairs Power Growth on September 3, 2024 and sell it today you would earn a total of 6,288 from holding Mairs Power Growth or generate 52.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mairs Power Growth vs. The Jensen Portfolio
Performance |
| Timeline |
| Mairs Power Growth |
| Jensen Portfolio |
Mairs Power and The Jensen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mairs Power and The Jensen
The main advantage of trading using opposite Mairs Power and The Jensen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mairs Power 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.| Mairs Power vs. Meridian Trarian Fund | Mairs Power vs. Mairs Power Balanced | Mairs Power vs. Clipper Fund Inc | Mairs Power vs. Meridian 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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