Correlation Between Janus High-yield and Balanced Portfolio

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

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

Diversification Opportunities for Janus High-yield and Balanced Portfolio

0.75

Correlation Coefficient

Janus High-yield  Balanced Portfolio

Poor diversification

The 3 months correlation between JANUS and Balanced is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Janus High Yield Fund and Balanced Portfolio Institution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Portfolio and Janus High-yield 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 High Yield Fund are associated (or correlated) with Balanced Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Portfolio has no effect on the direction of Janus High-yield i.e., Janus High-yield and Balanced Portfolio go up and down completely randomly.

Pair Corralation between Janus High-yield and Balanced Portfolio

Assuming the 90 days horizon Janus High-yield is expected to generate 2.18 times less return on investment than Balanced Portfolio. But when comparing it to its historical volatility, Janus High Yield Fund is 2.45 times less risky than Balanced Portfolio. It trades about 0.1 of its potential returns per unit of risk. Balanced Portfolio Institutional is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,144  in Balanced Portfolio Institutional on November 19, 2024 and sell it today you would earn a total of  152.00  from holding Balanced Portfolio Institutional or generate 2.95% return on investment over 90 days.

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

Janus High Yield Fund  vs.  Balanced Portfolio Institution

Janus High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Janus High Yield Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Janus High-yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Balanced Portfolio

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Portfolio Institutional are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Balanced Portfolio 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 High-yield and Balanced Portfolio

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

The idea behind Janus High Yield Fund and Balanced Portfolio Institutional 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.