Correlation Between Balanced Fund and The Jensen
Can any of the company-specific risk be diversified away by investing in both Balanced Fund 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 Balanced Fund and The Jensen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Investor and The Jensen Portfolio, you can compare the effects of market volatilities on Balanced Fund 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 Balanced Fund with a short position of The Jensen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and The Jensen.
Diversification Opportunities for Balanced Fund and The Jensen
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Balanced and The is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and The Jensen Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jensen Portfolio and Balanced Fund 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 Balanced Fund Investor 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 Balanced Fund i.e., Balanced Fund and The Jensen go up and down completely randomly.
Pair Corralation between Balanced Fund and The Jensen
Assuming the 90 days horizon Balanced Fund Investor is expected to generate 0.58 times more return on investment than The Jensen. However, Balanced Fund Investor is 1.72 times less risky than The Jensen. It trades about 0.09 of its potential returns per unit of risk. The Jensen Portfolio is currently generating about 0.02 per unit of risk. If you would invest 1,569 in Balanced Fund Investor on August 29, 2024 and sell it today you would earn a total of 447.00 from holding Balanced Fund Investor or generate 28.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Investor vs. The Jensen Portfolio
Performance |
| Timeline |
| Balanced Fund Investor |
| Jensen Portfolio |
Balanced Fund and The Jensen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and The Jensen
The main advantage of trading using opposite Balanced Fund and The Jensen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund 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.| Balanced Fund vs. Select Fund Investor | Balanced Fund vs. Heritage Fund Investor | Balanced Fund vs. Value Fund Investor | Balanced Fund vs. Growth Fund Investor |
| The Jensen vs. T Rowe Price | The Jensen vs. Balanced Fund Investor | The Jensen vs. Aam Select Income | The Jensen vs. Arrow Managed Futures |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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