Correlation Between Northeast Investors and Janus High-yield

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

By analyzing existing cross correlation between Northeast Investors Trust and Janus High Yield Fund, you can compare the effects of market volatilities on Northeast Investors and Janus High-yield 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 Northeast Investors with a short position of Janus High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northeast Investors and Janus High-yield.

Diversification Opportunities for Northeast Investors and Janus High-yield

0.52

Correlation Coefficient

Northeast Investors  Janus High-yield

Very weak diversification

The 3 months correlation between Northeast and Janus is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Northeast Investors Trust and Janus High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus High Yield and Northeast Investors 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 Northeast Investors Trust are associated (or correlated) with Janus High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus High Yield has no effect on the direction of Northeast Investors i.e., Northeast Investors and Janus High-yield go up and down completely randomly.

Pair Corralation between Northeast Investors and Janus High-yield

Assuming the 90 days horizon Northeast Investors is expected to generate 2.47 times less return on investment than Janus High-yield. In addition to that, Northeast Investors is 1.0 times more volatile than Janus High Yield Fund. It trades about 0.02 of its total potential returns per unit of risk. Janus High Yield Fund is currently generating about 0.05 per unit of volatility. If you would invest  720.00  in Janus High Yield Fund on December 29, 2024 and sell it today you would earn a total of  5.00  from holding Janus High Yield Fund or generate 0.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Northeast Investors Trust  vs.  Janus High Yield Fund

Northeast Investors Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Northeast Investors Trust are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Northeast Investors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Janus High Yield

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Janus High Yield Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Janus High-yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Northeast Investors and Janus High-yield

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

The idea behind Northeast Investors Trust and Janus High Yield 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.