Correlation Between Janus Detroit and Innovator

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

By analyzing existing cross correlation between Janus Detroit Street and Innovator SP 500, you can compare the effects of market volatilities on Janus Detroit and Innovator 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 Detroit with a short position of Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janus Detroit and Innovator.

Diversification Opportunities for Janus Detroit and Innovator

0.94

Correlation Coefficient

Janus Detroit  Innovator

Almost no diversification

The 3 months correlation between Janus and Innovator is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Janus Detroit Street and Innovator SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP 500 and Janus Detroit 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 Detroit Street are associated (or correlated) with Innovator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator SP 500 has no effect on the direction of Janus Detroit i.e., Janus Detroit and Innovator go up and down completely randomly.

Pair Corralation between Janus Detroit and Innovator

Given the investment horizon of 90 days Janus Detroit is expected to generate 1.5 times less return on investment than Innovator. But when comparing it to its historical volatility, Janus Detroit Street is 2.37 times less risky than Innovator. It trades about 0.22 of its potential returns per unit of risk. Innovator SP 500 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,289  in Innovator SP 500 on September 26, 2024 and sell it today you would earn a total of  1,495  from holding Innovator SP 500 or generate 45.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Janus Detroit Street  vs.  Innovator SP 500

Janus Detroit Street

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Detroit Street are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Janus Detroit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Innovator SP 500

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator SP 500 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Innovator is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Janus Detroit and Innovator

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

The idea behind Janus Detroit Street and Innovator SP 500 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.