Correlation Between Parnassus Core and Jensen Portfolio
Can any of the company-specific risk be diversified away by investing in both Parnassus Core and Jensen Portfolio 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 Parnassus Core and Jensen Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parnassus E Equity and The Jensen Portfolio, you can compare the effects of market volatilities on Parnassus Core and Jensen Portfolio 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 Parnassus Core with a short position of Jensen Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parnassus Core and Jensen Portfolio.
Diversification Opportunities for Parnassus Core and Jensen Portfolio
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Parnassus and Jensen is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Parnassus E Equity and The Jensen Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jensen Portfolio and Parnassus Core 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 Parnassus E Equity are associated (or correlated) with Jensen Portfolio. 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 Parnassus Core i.e., Parnassus Core and Jensen Portfolio go up and down completely randomly.
Pair Corralation between Parnassus Core and Jensen Portfolio
Assuming the 90 days horizon Parnassus E Equity is expected to generate 0.3 times more return on investment than Jensen Portfolio. However, Parnassus E Equity is 3.3 times less risky than Jensen Portfolio. It trades about 0.38 of its potential returns per unit of risk. The Jensen Portfolio is currently generating about -0.11 per unit of risk. If you would invest 6,380 in Parnassus E Equity on September 1, 2024 and sell it today you would earn a total of 365.00 from holding Parnassus E Equity or generate 5.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Parnassus E Equity vs. The Jensen Portfolio
Performance |
| Timeline |
| Parnassus E Equity |
| Jensen Portfolio |
Parnassus Core and Jensen Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parnassus Core and Jensen Portfolio
The main advantage of trading using opposite Parnassus Core and Jensen Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parnassus Core position performs unexpectedly, Jensen Portfolio 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 Portfolio will offset losses from the drop in Jensen Portfolio's long position.| Parnassus Core vs. Parnassus Endeavor Fund | Parnassus Core vs. Parnassus Mid Cap | Parnassus Core vs. The Jensen Portfolio | Parnassus Core vs. Metropolitan West Total |
| Jensen Portfolio vs. Clipper Fund Inc | Jensen Portfolio vs. Parnassus E Equity | Jensen Portfolio vs. Mairs Power Growth | Jensen Portfolio vs. Sound Shore Fund |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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