Correlation Between ETRACS 2xMonthly and Janus Henderson

Can any of the company-specific risk be diversified away by investing in both ETRACS 2xMonthly and Janus Henderson 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 ETRACS 2xMonthly and Janus Henderson into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ETRACS 2xMonthly Pay and Janus Henderson, you can compare the effects of market volatilities on ETRACS 2xMonthly and Janus Henderson 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 ETRACS 2xMonthly with a short position of Janus Henderson. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2xMonthly and Janus Henderson.

Diversification Opportunities for ETRACS 2xMonthly and Janus Henderson

-0.63

Correlation Coefficient

ETRACS 2xMonthly  Janus Henderson

Excellent diversification

The 3 months correlation between ETRACS and Janus is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2xMonthly Pay and Janus Henderson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Henderson and ETRACS 2xMonthly 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 ETRACS 2xMonthly Pay are associated (or correlated) with Janus Henderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Henderson has no effect on the direction of ETRACS 2xMonthly i.e., ETRACS 2xMonthly and Janus Henderson go up and down completely randomly.

Pair Corralation between ETRACS 2xMonthly and Janus Henderson

Given the investment horizon of 90 days ETRACS 2xMonthly is expected to generate 2.71 times less return on investment than Janus Henderson. In addition to that, ETRACS 2xMonthly is 1.71 times more volatile than Janus Henderson. It trades about 0.01 of its total potential returns per unit of risk. Janus Henderson is currently generating about 0.03 per unit of volatility. If you would invest  1,749  in Janus Henderson on October 26, 2024 and sell it today you would earn a total of  200.00  from holding Janus Henderson or generate 11.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	86.03%
Values	Daily Returns

ETRACS 2xMonthly Pay  vs.  Janus Henderson

ETRACS 2xMonthly Pay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETRACS 2xMonthly Pay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, ETRACS 2xMonthly is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Janus Henderson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus Henderson has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Janus Henderson is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ETRACS 2xMonthly and Janus Henderson

The main advantage of trading using opposite ETRACS 2xMonthly and Janus Henderson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2xMonthly position performs unexpectedly, Janus Henderson 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 Henderson will offset losses from the drop in Janus Henderson's long position.

The idea behind ETRACS 2xMonthly Pay and Janus Henderson 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.