Correlation Between The Jensen and Chase Growth
Can any of the company-specific risk be diversified away by investing in both The Jensen and Chase Growth 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 The Jensen and Chase Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Jensen Portfolio and Chase Growth Fund, you can compare the effects of market volatilities on The Jensen and Chase Growth 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 The Jensen with a short position of Chase Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Jensen and Chase Growth.
Diversification Opportunities for The Jensen and Chase Growth
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between The and Chase is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding The Jensen Portfolio and Chase Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chase Growth and The Jensen 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 The Jensen Portfolio are associated (or correlated) with Chase Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chase Growth has no effect on the direction of The Jensen i.e., The Jensen and Chase Growth go up and down completely randomly.
Pair Corralation between The Jensen and Chase Growth
Assuming the 90 days horizon The Jensen is expected to generate 1.75 times less return on investment than Chase Growth. But when comparing it to its historical volatility, The Jensen Portfolio is 1.34 times less risky than Chase Growth. It trades about 0.07 of its potential returns per unit of risk. Chase Growth Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,474 in Chase Growth Fund on February 21, 2024 and sell it today you would earn a total of 48.00 from holding Chase Growth Fund or generate 3.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 97.62% |
Values | Daily Returns |
The Jensen Portfolio vs. Chase Growth Fund
Performance |
Timeline |
Jensen Portfolio |
Chase Growth |
The Jensen and Chase Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with The Jensen and Chase Growth
The main advantage of trading using opposite The Jensen and Chase Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Jensen position performs unexpectedly, Chase Growth 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 Chase Growth will offset losses from the drop in Chase Growth's long position.The idea behind The Jensen Portfolio and Chase Growth Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Chase Growth vs. Pfizer Inc | Chase Growth vs. First Financial Northwest | Chase Growth vs. Vanguard Total Stock | Chase Growth vs. iShares Core SP |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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