Correlation Between Janus Forty and Janus Balanced

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

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

Diversification Opportunities for Janus Forty and Janus Balanced

0.72

Correlation Coefficient

Janus Forty  Janus Balanced

Poor diversification

The 3 months correlation between Janus and Janus is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Janus Forty 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 Janus Forty 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 Janus Forty 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 Janus Forty i.e., Janus Forty and Janus Balanced go up and down completely randomly.

Pair Corralation between Janus Forty and Janus Balanced

Assuming the 90 days horizon Janus Forty Fund is expected to generate 2.17 times more return on investment than Janus Balanced. However, Janus Forty is 2.17 times more volatile than Janus Balanced Fund. It trades about 0.05 of its potential returns per unit of risk. Janus Balanced Fund is currently generating about 0.07 per unit of risk. If you would invest  2,834  in Janus Forty Fund on October 13, 2024 and sell it today you would earn a total of  769.00  from holding Janus Forty Fund or generate 27.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Janus Forty Fund  vs.  Janus Balanced Fund

Janus Forty Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus Forty Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Janus Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus Balanced Fund has generated negative risk-adjusted returns adding no value to fund investors. 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 Janus Forty and Janus Balanced

The main advantage of trading using opposite Janus Forty and Janus Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Janus Forty 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 Janus Forty 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.