Correlation Between Thompson Bond and Janus Short-term

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

By analyzing existing cross correlation between Thompson Bond Fund and Janus Short Term Bond, you can compare the effects of market volatilities on Thompson Bond and Janus Short-term 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 Thompson Bond with a short position of Janus Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thompson Bond and Janus Short-term.

Diversification Opportunities for Thompson Bond and Janus Short-term

0.88

Correlation Coefficient

Thompson Bond  Janus Short-term

Very poor diversification

The 3 months correlation between Thompson and Janus is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Thompson Bond Fund and Janus Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Short Term and Thompson Bond 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 Thompson Bond Fund are associated (or correlated) with Janus Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Short Term has no effect on the direction of Thompson Bond i.e., Thompson Bond and Janus Short-term go up and down completely randomly.

Pair Corralation between Thompson Bond and Janus Short-term

Assuming the 90 days horizon Thompson Bond Fund is expected to generate 0.78 times more return on investment than Janus Short-term. However, Thompson Bond Fund is 1.28 times less risky than Janus Short-term. It trades about 0.32 of its potential returns per unit of risk. Janus Short Term Bond is currently generating about 0.12 per unit of risk. If you would invest  1,037  in Thompson Bond Fund on December 2, 2024 and sell it today you would earn a total of  24.00  from holding Thompson Bond Fund or generate 2.31% return on investment over 90 days.

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

Thompson Bond Fund  vs.  Janus Short Term Bond

Thompson Bond

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thompson Bond Fund are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Thompson Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Janus Short Term

Risk-Adjusted Performance

OK

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

Pair Trading with Thompson Bond and Janus Short-term

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

The idea behind Thompson Bond Fund and Janus Short Term 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.

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