Correlation Between Global X and Janus Henderson

Can any of the company-specific risk be diversified away by investing in both Global X and Janus Henderson 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 Global X and Janus Henderson into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global X SP and Janus Henderson SmallMid, you can compare the effects of market volatilities on Global X and Janus Henderson 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 Global X with a short position of Janus Henderson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Janus Henderson.

Diversification Opportunities for Global X and Janus Henderson

0.89

Correlation Coefficient

Global X  Janus Henderson

Very poor diversification

The 3 months correlation between Global and Janus is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Global X SP and Janus Henderson SmallMid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Henderson SmallMid and Global X 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 Global X SP are associated (or correlated) with Janus Henderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Henderson SmallMid has no effect on the direction of Global X i.e., Global X and Janus Henderson go up and down completely randomly.

Pair Corralation between Global X and Janus Henderson

Given the investment horizon of 90 days Global X SP is expected to generate 0.96 times more return on investment than Janus Henderson. However, Global X SP is 1.04 times less risky than Janus Henderson. It trades about -0.05 of its potential returns per unit of risk. Janus Henderson SmallMid is currently generating about -0.08 per unit of risk. If you would invest  7,063  in Global X SP on December 19, 2024 and sell it today you would lose (254.00) from holding Global X SP or give up 3.6% of portfolio value over 90 days.

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

Global X SP  vs.  Janus Henderson SmallMid

Global X SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Global X is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Janus Henderson SmallMid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Janus Henderson SmallMid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Janus Henderson is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global X and Janus Henderson

The main advantage of trading using opposite Global X and Janus Henderson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Janus Henderson 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 Janus Henderson will offset losses from the drop in Janus Henderson's long position.

The idea behind Global X SP and Janus Henderson SmallMid 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.