Correlation Between Sound Shore and Jensen Portfolio
Can any of the company-specific risk be diversified away by investing in both Sound Shore 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 Sound Shore and Jensen Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sound Shore Fund and The Jensen Portfolio, you can compare the effects of market volatilities on Sound Shore 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 Sound Shore with a short position of Jensen Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Shore and Jensen Portfolio.
Diversification Opportunities for Sound Shore and Jensen Portfolio
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sound and Jensen is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sound Shore Fund and The Jensen Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jensen Portfolio and Sound Shore 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 Sound Shore Fund 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 Sound Shore i.e., Sound Shore and Jensen Portfolio go up and down completely randomly.
Pair Corralation between Sound Shore and Jensen Portfolio
Assuming the 90 days horizon Sound Shore is expected to generate 1.79 times less return on investment than Jensen Portfolio. In addition to that, Sound Shore is 1.2 times more volatile than The Jensen Portfolio. It trades about 0.14 of its total potential returns per unit of risk. The Jensen Portfolio is currently generating about 0.31 per unit of volatility. If you would invest 5,816 in The Jensen Portfolio on November 5, 2024 and sell it today you would earn a total of 199.00 from holding The Jensen Portfolio or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sound Shore Fund vs. The Jensen Portfolio
Performance |
| Timeline |
| Sound Shore Fund |
| Jensen Portfolio |
Sound Shore and Jensen Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sound Shore and Jensen Portfolio
The main advantage of trading using opposite Sound Shore and Jensen Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sound Shore 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.| Sound Shore vs. Blackrock Short Obligations | Sound Shore vs. Siit Ultra Short | Sound Shore vs. Leader Short Term Bond | Sound Shore vs. Touchstone Ultra Short |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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