Correlation Between Pacific Capital and Janus Global

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

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

Diversification Opportunities for Pacific Capital and Janus Global

0.91

Correlation Coefficient

Pacific Capital  Janus Global

Almost no diversification

The 3 months correlation between Pacific and Janus is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Capital Tax Free and Janus Global Unconstrained in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Global Unconst and Pacific Capital 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 Pacific Capital Tax Free 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 Unconst has no effect on the direction of Pacific Capital i.e., Pacific Capital and Janus Global go up and down completely randomly.

Pair Corralation between Pacific Capital and Janus Global

Assuming the 90 days horizon Pacific Capital is expected to generate 1.61 times less return on investment than Janus Global. In addition to that, Pacific Capital is 1.15 times more volatile than Janus Global Unconstrained. It trades about 0.1 of its total potential returns per unit of risk. Janus Global Unconstrained is currently generating about 0.18 per unit of volatility. If you would invest  884.00  in Janus Global Unconstrained on December 21, 2024 and sell it today you would earn a total of  12.00  from holding Janus Global Unconstrained or generate 1.36% return on investment over 90 days.

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

Pacific Capital Tax Free  vs.  Janus Global Unconstrained

Pacific Capital Tax

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Capital Tax Free are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pacific Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Janus Global Unconst

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Global Unconstrained are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 Pacific Capital and Janus Global

The main advantage of trading using opposite Pacific Capital and Janus Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Capital 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 Pacific Capital Tax Free and Janus Global Unconstrained 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.