While the difference between trend-following and momentum trading is clear to most active style managers, it is important to understand the distinctions and realize that these two strategies will not follow the same return behavior. Don't use these strategies terms interchangeably in conversations. Both look at past price behavior; nevertheless, one should not expect similar performance or a high correlation.
Trend-following is an absolute return, directional strategy while momentum is relative return, market neutral strategy. The trend-following is looking to take advantage of beta direction across asset classes while the momentum trader is looking for cross-sectional opportunities within an asset class.
Can you hold both? Yes, but do not say they are similar.
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