Correlation Between Jensen Portfolio and Chase Growth

Can any of the company-specific risk be diversified away by investing in both Jensen Portfolio 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 Jensen Portfolio 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 Jensen Portfolio 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 Jensen Portfolio with a short position of Chase Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jensen Portfolio and Chase Growth.

Diversification Opportunities for Jensen Portfolio and Chase Growth

0.72

Correlation Coefficient

Jensen Portfolio  Chase Growth

Poor diversification

The 3 months correlation between Jensen and Chase is 0.72. 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 Jensen Portfolio 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 Jensen Portfolio i.e., Jensen Portfolio and Chase Growth go up and down completely randomly.

Pair Corralation between Jensen Portfolio and Chase Growth

Assuming the 90 days horizon Jensen Portfolio is expected to generate 5.4 times less return on investment than Chase Growth. But when comparing it to its historical volatility, The Jensen Portfolio is 1.25 times less risky than Chase Growth. It trades about 0.06 of its potential returns per unit of risk. Chase Growth Fund is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,564  in Chase Growth Fund on September 12, 2024 and sell it today you would earn a total of  204.00  from holding Chase Growth Fund or generate 13.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

The Jensen Portfolio  vs.  Chase Growth Fund

Jensen Portfolio

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Jensen Portfolio are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jensen Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chase Growth

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chase Growth Fund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Chase Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jensen Portfolio and Chase Growth

The main advantage of trading using opposite Jensen Portfolio and Chase Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jensen Portfolio 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.

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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.