Correlation Between Microsoft and Janus Global

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

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

Diversification Opportunities for Microsoft and Janus Global

0.35

Correlation Coefficient

Microsoft  Janus Global

Weak diversification

The 3 months correlation between Microsoft and Janus is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Janus Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Global Allocation and Microsoft 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 Microsoft are associated (or correlated) with Janus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Global Allocation has no effect on the direction of Microsoft i.e., Microsoft and Janus Global go up and down completely randomly.

Pair Corralation between Microsoft and Janus Global

Given the investment horizon of 90 days Microsoft is expected to generate 2.39 times more return on investment than Janus Global. However, Microsoft is 2.39 times more volatile than Janus Global Allocation. It trades about 0.32 of its potential returns per unit of risk. Janus Global Allocation is currently generating about 0.06 per unit of risk. If you would invest  41,718  in Microsoft on September 12, 2024 and sell it today you would earn a total of  3,182  from holding Microsoft or generate 7.63% return on investment over 90 days.

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

Microsoft  vs.  Janus Global Allocation

Microsoft

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Janus Global Allocation

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Global Allocation are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Janus Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and Janus Global

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

The idea behind Microsoft and Janus Global Allocation 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.