Correlation Between Sound Shore and The Jensen
Can any of the company-specific risk be diversified away by investing in both Sound Shore 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 Sound Shore and The Jensen 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 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 Sound Shore with a short position of The Jensen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Shore and The Jensen.
Diversification Opportunities for Sound Shore and The Jensen
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sound and The is 0.11. 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 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 Sound Shore i.e., Sound Shore and The Jensen go up and down completely randomly.
Pair Corralation between Sound Shore and The Jensen
Assuming the 90 days horizon Sound Shore Fund is expected to under-perform the The Jensen. In addition to that, Sound Shore is 4.08 times more volatile than The Jensen Portfolio. It trades about -0.15 of its total potential returns per unit of risk. The Jensen Portfolio is currently generating about -0.06 per unit of volatility. If you would invest 6,013 in The Jensen Portfolio on December 5, 2024 and sell it today you would lose (149.00) from holding The Jensen Portfolio or give up 2.48% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.33% |
Values | Daily Returns |
Sound Shore Fund vs. The Jensen Portfolio
Performance |
Timeline |
Sound Shore Fund |
Jensen Portfolio |
Sound Shore and The Jensen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sound Shore and The Jensen
The main advantage of trading using opposite Sound Shore and The Jensen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sound Shore 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.Sound Shore vs. Wisdomtree Siegel Moderate | Sound Shore vs. Vanguard Target Retirement | Sound Shore vs. Calvert Moderate Allocation | Sound Shore vs. Hartford Moderate Allocation |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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