Correlation Between Janus Henderson and First Trust

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

By analyzing existing cross correlation between Janus Henderson SmallMid and First Trust International, you can compare the effects of market volatilities on Janus Henderson and First Trust 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 Henderson with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janus Henderson and First Trust.

Diversification Opportunities for Janus Henderson and First Trust

0.63

Correlation Coefficient

Janus Henderson  First Trust

Poor diversification

The 3 months correlation between Janus and First is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Janus Henderson SmallMid and First Trust International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust International and Janus Henderson 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 Henderson SmallMid are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust International has no effect on the direction of Janus Henderson i.e., Janus Henderson and First Trust go up and down completely randomly.

Pair Corralation between Janus Henderson and First Trust

Given the investment horizon of 90 days Janus Henderson is expected to generate 2.63 times less return on investment than First Trust. But when comparing it to its historical volatility, Janus Henderson SmallMid is 1.6 times less risky than First Trust. It trades about 0.17 of its potential returns per unit of risk. First Trust International is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  4,790  in First Trust International on October 26, 2024 and sell it today you would earn a total of  277.00  from holding First Trust International or generate 5.78% return on investment over 90 days.

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

Janus Henderson SmallMid  vs.  First Trust International

Janus Henderson SmallMid

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Henderson SmallMid are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting primary indicators, Janus Henderson may actually be approaching a critical reversion point that can send shares even higher in February 2025.

First Trust International

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, First Trust is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Janus Henderson and First Trust

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

The idea behind Janus Henderson SmallMid and First Trust International 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.