Correlation Between Regional Bank and Janus Balanced

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

By analyzing existing cross correlation between Regional Bank Fund and Janus Balanced Fund, you can compare the effects of market volatilities on Regional Bank and Janus Balanced 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 Regional Bank with a short position of Janus Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Bank and Janus Balanced.

Diversification Opportunities for Regional Bank and Janus Balanced

0.71

Correlation Coefficient

Regional Bank  Janus Balanced

Poor diversification

The 3 months correlation between Regional and Janus is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Regional Bank Fund and Janus Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Balanced and Regional Bank 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 Regional Bank Fund are associated (or correlated) with Janus Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Balanced has no effect on the direction of Regional Bank i.e., Regional Bank and Janus Balanced go up and down completely randomly.

Pair Corralation between Regional Bank and Janus Balanced

Assuming the 90 days horizon Regional Bank Fund is expected to generate 4.31 times more return on investment than Janus Balanced. However, Regional Bank is 4.31 times more volatile than Janus Balanced Fund. It trades about 0.14 of its potential returns per unit of risk. Janus Balanced Fund is currently generating about 0.17 per unit of risk. If you would invest  2,683  in Regional Bank Fund on September 4, 2024 and sell it today you would earn a total of  500.00  from holding Regional Bank Fund or generate 18.64% return on investment over 90 days.

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

Regional Bank Fund  vs.  Janus Balanced Fund

Regional Bank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regional Bank Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Regional Bank showed solid returns over the last few months and may actually be approaching a breakup point.

Janus Balanced

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Balanced Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Janus Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Regional Bank and Janus Balanced

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

The idea behind Regional Bank Fund and Janus Balanced 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.