Correlation Between Metropolitan West and Janus Flexible

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

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

Diversification Opportunities for Metropolitan West and Janus Flexible

0.95

Correlation Coefficient

Metropolitan West  Janus Flexible

Almost no diversification

The 3 months correlation between Metropolitan and Janus is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Total and Janus Flexible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Flexible Bond and Metropolitan West 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 Metropolitan West Total are associated (or correlated) with Janus Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Flexible Bond has no effect on the direction of Metropolitan West i.e., Metropolitan West and Janus Flexible go up and down completely randomly.

Pair Corralation between Metropolitan West and Janus Flexible

Assuming the 90 days horizon Metropolitan West is expected to generate 1.06 times less return on investment than Janus Flexible. In addition to that, Metropolitan West is 1.1 times more volatile than Janus Flexible Bond. It trades about 0.1 of its total potential returns per unit of risk. Janus Flexible Bond is currently generating about 0.12 per unit of volatility. If you would invest  911.00  in Janus Flexible Bond on December 31, 2024 and sell it today you would earn a total of  21.00  from holding Janus Flexible Bond or generate 2.31% return on investment over 90 days.

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

Metropolitan West Total  vs.  Janus Flexible Bond

Metropolitan West Total

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metropolitan West Total are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Metropolitan West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Janus Flexible Bond

Risk-Adjusted Performance

OK

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

Pair Trading with Metropolitan West and Janus Flexible

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

The idea behind Metropolitan West Total and Janus Flexible Bond 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.