Correlation Between Janus High and Goldman Sachs

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

Diversification Opportunities for Janus High and Goldman Sachs

0.59

Correlation Coefficient

Janus High  Goldman Sachs

Very weak diversification

The 3 months correlation between Janus and Goldman is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Janus High Yield Fund and Goldman Sachs Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Equity and Janus High 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Equity has no effect on the direction of Janus High i.e., Janus High and Goldman Sachs go up and down completely randomly.

Pair Corralation between Janus High and Goldman Sachs

Assuming the 90 days horizon Janus High is expected to generate 2.54 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Janus High Yield Fund is 2.16 times less risky than Goldman Sachs. It trades about 0.09 of its potential returns per unit of risk. Goldman Sachs Equity is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,232  in Goldman Sachs Equity on October 9, 2024 and sell it today you would earn a total of  483.00  from holding Goldman Sachs Equity or generate 39.2% return on investment over 90 days.

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

Janus High Yield Fund  vs.  Goldman Sachs Equity

Janus High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus High Yield Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Janus High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Equity

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Equity are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Goldman Sachs 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 and Goldman Sachs

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

The idea behind Janus High Yield Fund and Goldman Sachs Equity 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.