Correlation Between Janus Forty and Large Cap

Can any of the company-specific risk be diversified away by investing in both Janus Forty and Large Cap 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 Large Cap 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 Large Cap Growth, you can compare the effects of market volatilities on Janus Forty and Large Cap 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 Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janus Forty and Large Cap.

Diversification Opportunities for Janus Forty and Large Cap

0.93

Correlation Coefficient

Janus Forty  Large Cap

Almost no diversification

The 3 months correlation between Janus and Large is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Janus Forty Fund and Large Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Growth 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 Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Growth has no effect on the direction of Janus Forty i.e., Janus Forty and Large Cap go up and down completely randomly.

Pair Corralation between Janus Forty and Large Cap

Assuming the 90 days horizon Janus Forty Fund is expected to generate 1.03 times more return on investment than Large Cap. However, Janus Forty is 1.03 times more volatile than Large Cap Growth. It trades about 0.27 of its potential returns per unit of risk. Large Cap Growth is currently generating about 0.27 per unit of risk. If you would invest  5,189  in Janus Forty Fund on September 6, 2024 and sell it today you would earn a total of  811.00  from holding Janus Forty Fund or generate 15.63% return on investment over 90 days.

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

Janus Forty Fund  vs.  Large Cap Growth

Janus Forty Fund

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Forty Fund are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Janus Forty showed solid returns over the last few months and may actually be approaching a breakup point.

Large Cap Growth

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Growth are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Large Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Janus Forty and Large Cap

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

The idea behind Janus Forty Fund and Large Cap Growth 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.