Correlation Between Janus Contrarian and Janus Balanced

Can any of the company-specific risk be diversified away by investing in both Janus Contrarian 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 Contrarian 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 Trarian Fund and Janus Balanced Fund, you can compare the effects of market volatilities on Janus Contrarian 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 Contrarian with a short position of Janus Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janus Contrarian and Janus Balanced.

Diversification Opportunities for Janus Contrarian and Janus Balanced

0.95

Correlation Coefficient

Janus Contrarian  Janus Balanced

Almost no diversification

The 3 months correlation between Janus and Janus is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Janus Trarian 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 Contrarian 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 Trarian 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 Contrarian i.e., Janus Contrarian and Janus Balanced go up and down completely randomly.

Pair Corralation between Janus Contrarian and Janus Balanced

Assuming the 90 days horizon Janus Trarian Fund is expected to generate 2.06 times more return on investment than Janus Balanced. However, Janus Contrarian is 2.06 times more volatile than Janus Balanced Fund. It trades about 0.18 of its potential returns per unit of risk. Janus Balanced Fund is currently generating about 0.16 per unit of risk. If you would invest  2,904  in Janus Trarian Fund on August 31, 2024 and sell it today you would earn a total of  333.00  from holding Janus Trarian Fund or generate 11.47% return on investment over 90 days.

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

Janus Trarian Fund  vs.  Janus Balanced Fund

Janus Contrarian

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Trarian Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Janus Contrarian may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Janus Balanced

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Balanced Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, 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 Contrarian and Janus Balanced

The main advantage of trading using opposite Janus Contrarian and Janus Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Janus Contrarian 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 Trarian 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.