Correlation Between Janus Short and Short Duration

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

Diversification Opportunities for Janus Short and Short Duration

0.78

Correlation Coefficient

Janus Short  Short Duration

Poor diversification

The 3 months correlation between Janus and Short is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Janus Short Term Bond and Short Duration Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Duration Income and Janus Short 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 Short Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Duration Income has no effect on the direction of Janus Short i.e., Janus Short and Short Duration go up and down completely randomly.

Pair Corralation between Janus Short and Short Duration

Assuming the 90 days horizon Janus Short Term Bond is expected to generate 1.85 times more return on investment than Short Duration. However, Janus Short is 1.85 times more volatile than Short Duration Income. It trades about 0.06 of its potential returns per unit of risk. Short Duration Income is currently generating about 0.05 per unit of risk. If you would invest  287.00  in Janus Short Term Bond on September 12, 2024 and sell it today you would earn a total of  2.00  from holding Janus Short Term Bond or generate 0.7% return on investment over 90 days.

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

Janus Short Term Bond  vs.  Short Duration Income

Janus Short Term

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Short Term Bond are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Janus Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Short Duration Income

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Short Duration Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Short Duration 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 and Short Duration

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

The idea behind Janus Short Term Bond and Short Duration Income 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.