Correlation Between Janus Global and Vanguard Health

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

By analyzing existing cross correlation between Janus Global Life and Vanguard Health Care, you can compare the effects of market volatilities on Janus Global and Vanguard Health 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 Global with a short position of Vanguard Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janus Global and Vanguard Health.

Diversification Opportunities for Janus Global and Vanguard Health

0.84

Correlation Coefficient

Janus Global  Vanguard Health

Very poor diversification

The 3 months correlation between Janus and Vanguard is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Janus Global Life and Vanguard Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Health Care and Janus Global 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 Global Life are associated (or correlated) with Vanguard Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Health Care has no effect on the direction of Janus Global i.e., Janus Global and Vanguard Health go up and down completely randomly.

Pair Corralation between Janus Global and Vanguard Health

Assuming the 90 days horizon Janus Global is expected to generate 2.39 times less return on investment than Vanguard Health. In addition to that, Janus Global is 1.08 times more volatile than Vanguard Health Care. It trades about 0.01 of its total potential returns per unit of risk. Vanguard Health Care is currently generating about 0.03 per unit of volatility. If you would invest  7,764  in Vanguard Health Care on December 27, 2024 and sell it today you would earn a total of  111.00  from holding Vanguard Health Care or generate 1.43% return on investment over 90 days.

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

Janus Global Life  vs.  Vanguard Health Care

Janus Global Life

Risk-Adjusted Performance

Very Weak

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

Vanguard Health Care

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Health Care are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Health 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 Global and Vanguard Health

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

The idea behind Janus Global Life and Vanguard Health Care 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.