Correlation Between Janus Short-term and Janus Flexible

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

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

Diversification Opportunities for Janus Short-term and Janus Flexible

0.95

Correlation Coefficient

Janus Short-term  Janus Flexible

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 Short Term Bond 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 Janus Short-term 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 Short Term Bond 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 Janus Short-term i.e., Janus Short-term and Janus Flexible go up and down completely randomly.

Pair Corralation between Janus Short-term and Janus Flexible

Assuming the 90 days horizon Janus Short-term is expected to generate 1.39 times less return on investment than Janus Flexible. But when comparing it to its historical volatility, Janus Short Term Bond is 2.11 times less risky than Janus Flexible. It trades about 0.2 of its potential returns per unit of risk. Janus Flexible Bond is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  905.00  in Janus Flexible Bond on December 27, 2024 and sell it today you would earn a total of  22.00  from holding Janus Flexible Bond or generate 2.43% return on investment over 90 days.

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

Janus Short Term Bond  vs.  Janus Flexible Bond

Janus Short Term

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Short Term Bond are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Janus Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Janus Flexible Bond

Risk-Adjusted Performance

OK

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 technical and 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 Janus Short-term and Janus Flexible

The main advantage of trading using opposite Janus Short-term and Janus Flexible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Janus Short-term 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 Janus Short Term Bond 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.