Correlation Between Jensen Quality and Small Company
Can any of the company-specific risk be diversified away by investing in both Jensen Quality and Small Company 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 Quality and Small Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jensen Quality Value and Small Pany Fund, you can compare the effects of market volatilities on Jensen Quality and Small Company 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 Quality with a short position of Small Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jensen Quality and Small Company.
Diversification Opportunities for Jensen Quality and Small Company
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jensen and Small is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Jensen Quality Value and Small Pany Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Fund and Jensen Quality 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 Jensen Quality Value are associated (or correlated) with Small Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Fund has no effect on the direction of Jensen Quality i.e., Jensen Quality and Small Company go up and down completely randomly.
Pair Corralation between Jensen Quality and Small Company
Assuming the 90 days horizon Jensen Quality Value is expected to generate 1.38 times more return on investment than Small Company. However, Jensen Quality is 1.38 times more volatile than Small Pany Fund. It trades about 0.06 of its potential returns per unit of risk. Small Pany Fund is currently generating about 0.02 per unit of risk. If you would invest 1,570 in Jensen Quality Value on August 27, 2025 and sell it today you would earn a total of 87.00 from holding Jensen Quality Value or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jensen Quality Value vs. Small Pany Fund
Performance |
| Timeline |
| Jensen Quality Value |
| Small Pany Fund |
Jensen Quality and Small Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jensen Quality and Small Company
The main advantage of trading using opposite Jensen Quality and Small Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jensen Quality position performs unexpectedly, Small Company 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 Small Company will offset losses from the drop in Small Company's long position.| Jensen Quality vs. Arrow Managed Futures | Jensen Quality vs. Diamond Hill Long Short | Jensen Quality vs. Rbb Fund | Jensen Quality vs. Qs Large Cap |
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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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