Correlation Between Janus Forty and Conestoga Small

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

By analyzing existing cross correlation between Janus Forty Fund and Conestoga Small Cap, you can compare the effects of market volatilities on Janus Forty and Conestoga Small 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 Forty with a short position of Conestoga Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janus Forty and Conestoga Small.

Diversification Opportunities for Janus Forty and Conestoga Small

0.65

Correlation Coefficient

Janus Forty  Conestoga Small

Poor diversification

The 3 months correlation between Janus and Conestoga is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Janus Forty Fund and Conestoga Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conestoga Small Cap and Janus Forty 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 Forty Fund are associated (or correlated) with Conestoga Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conestoga Small Cap has no effect on the direction of Janus Forty i.e., Janus Forty and Conestoga Small go up and down completely randomly.

Pair Corralation between Janus Forty and Conestoga Small

Assuming the 90 days horizon Janus Forty Fund is expected to generate 1.54 times more return on investment than Conestoga Small. However, Janus Forty is 1.54 times more volatile than Conestoga Small Cap. It trades about -0.11 of its potential returns per unit of risk. Conestoga Small Cap is currently generating about -0.2 per unit of risk. If you would invest  6,453  in Janus Forty Fund on December 2, 2024 and sell it today you would lose (724.00) from holding Janus Forty Fund or give up 11.22% of portfolio value over 90 days.

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

Janus Forty Fund  vs.  Conestoga Small Cap

Janus Forty Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Janus Forty Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Conestoga Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Conestoga Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Janus Forty and Conestoga Small

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

The idea behind Janus Forty Fund and Conestoga Small Cap 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.