Correlation Between Transamerica High and Janus High-yield

Can any of the company-specific risk be diversified away by investing in both Transamerica High 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 Transamerica High 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 Transamerica High Yield and Janus High Yield Fund, you can compare the effects of market volatilities on Transamerica High 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 Transamerica High with a short position of Janus High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica High and Janus High-yield.

Diversification Opportunities for Transamerica High and Janus High-yield

0.97

Correlation Coefficient

Transamerica High  Janus High-yield

Almost no diversification

The 3 months correlation between Transamerica and Janus is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica High Yield 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 Transamerica High 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 Transamerica High Yield 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 Transamerica High i.e., Transamerica High and Janus High-yield go up and down completely randomly.

Pair Corralation between Transamerica High and Janus High-yield

Assuming the 90 days horizon Transamerica High is expected to generate 1.11 times less return on investment than Janus High-yield. But when comparing it to its historical volatility, Transamerica High Yield is 1.07 times less risky than Janus High-yield. It trades about 0.09 of its potential returns per unit of risk. Janus High Yield Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  721.00  in Janus High Yield Fund on December 23, 2024 and sell it today you would earn a total of  9.00  from holding Janus High Yield Fund or generate 1.25% return on investment over 90 days.

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

Transamerica High Yield  vs.  Janus High Yield Fund

Transamerica High Yield

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica High Yield are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Transamerica High 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

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Janus High Yield Fund are ranked lower than 6 (%) 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 Transamerica High and Janus High-yield

The main advantage of trading using opposite Transamerica High and Janus High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica High 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 Transamerica High Yield 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.