Correlation Between James Alpha and Janus Flexible

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

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

Diversification Opportunities for James Alpha and Janus Flexible

0.95

Correlation Coefficient

James Alpha  Janus Flexible

Almost no diversification

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

Pair Corralation between James Alpha and Janus Flexible

Assuming the 90 days horizon James Alpha is expected to generate 1.2 times less return on investment than Janus Flexible. But when comparing it to its historical volatility, James Alpha Structured is 2.19 times less risky than Janus Flexible. It trades about 0.19 of its potential returns per unit of risk. Janus Flexible Bond is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  909.00  in Janus Flexible Bond on December 28, 2024 and sell it today you would earn a total of  18.00  from holding Janus Flexible Bond or generate 1.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

James Alpha Structured  vs.  Janus Flexible Bond

James Alpha Structured

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in James Alpha Structured are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, James Alpha 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

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Flexible Bond are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 James Alpha and Janus Flexible

The main advantage of trading using opposite James Alpha and Janus Flexible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James Alpha 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 James Alpha Structured 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.