Correlation Between Janus Investment and Emerging Markets

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

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

Diversification Opportunities for Janus Investment and Emerging Markets

0.0

Correlation Coefficient

Janus Investment  Emerging Markets

Pay attention - limited upside

The 3 months correlation between Janus and Emerging is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Janus Investment and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Janus Investment 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 Investment are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Janus Investment i.e., Janus Investment and Emerging Markets go up and down completely randomly.

Pair Corralation between Janus Investment and Emerging Markets

Assuming the 90 days horizon Janus Investment is expected to generate 1.51 times less return on investment than Emerging Markets. But when comparing it to its historical volatility, Janus Investment is 6.71 times less risky than Emerging Markets. It trades about 0.13 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,050  in Emerging Markets Fund on December 2, 2024 and sell it today you would earn a total of  119.00  from holding Emerging Markets Fund or generate 11.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Janus Investment  vs.  Emerging Markets Fund

Janus Investment

Risk-Adjusted Performance

Very Weak

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

Emerging Markets

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emerging Markets Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Emerging Markets 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 Investment and Emerging Markets

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

The idea behind Janus Investment and Emerging Markets Fund 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.