Correlation Between Virtus Emerging and Janus Flexible

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

By analyzing existing cross correlation between Virtus Emerging Markets and Janus Flexible Bond, you can compare the effects of market volatilities on Virtus Emerging and Janus Flexible 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 Virtus Emerging with a short position of Janus Flexible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Emerging and Janus Flexible.

Diversification Opportunities for Virtus Emerging and Janus Flexible

0.72

Correlation Coefficient

Virtus Emerging  Janus Flexible

Poor diversification

The 3 months correlation between Virtus and Janus is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Emerging Markets and Janus Flexible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Flexible Bond and Virtus Emerging 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 Virtus Emerging Markets are associated (or correlated) with Janus Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Flexible Bond has no effect on the direction of Virtus Emerging i.e., Virtus Emerging and Janus Flexible go up and down completely randomly.

Pair Corralation between Virtus Emerging and Janus Flexible

Assuming the 90 days horizon Virtus Emerging Markets is expected to under-perform the Janus Flexible. In addition to that, Virtus Emerging is 2.51 times more volatile than Janus Flexible Bond. It trades about -0.13 of its total potential returns per unit of risk. Janus Flexible Bond is currently generating about -0.19 per unit of volatility. If you would invest  954.00  in Janus Flexible Bond on September 25, 2024 and sell it today you would lose (38.00) from holding Janus Flexible Bond or give up 3.98% of portfolio value over 90 days.

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

Virtus Emerging Markets  vs.  Janus Flexible Bond

Virtus Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Janus Flexible Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus Flexible Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Janus Flexible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Virtus Emerging and Janus Flexible

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

The idea behind Virtus Emerging Markets and Janus Flexible Bond 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.