Correlation Between Federated Total and Janus Short-term

Can any of the company-specific risk be diversified away by investing in both Federated Total 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 Federated Total 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 Federated Total Return and Janus Short Term Bond, you can compare the effects of market volatilities on Federated Total 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 Federated Total with a short position of Janus Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Total and Janus Short-term.

Diversification Opportunities for Federated Total and Janus Short-term

0.95

Correlation Coefficient

Federated Total  Janus Short-term

Almost no diversification

The 3 months correlation between Federated and Janus is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Federated Total Return 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 Federated Total 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 Federated Total Return 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 Federated Total i.e., Federated Total and Janus Short-term go up and down completely randomly.

Pair Corralation between Federated Total and Janus Short-term

Assuming the 90 days horizon Federated Total Return is expected to generate 2.09 times more return on investment than Janus Short-term. However, Federated Total is 2.09 times more volatile than Janus Short Term Bond. It trades about 0.12 of its potential returns per unit of risk. Janus Short Term Bond is currently generating about 0.16 per unit of risk. If you would invest  927.00  in Federated Total Return on December 30, 2024 and sell it today you would earn a total of  20.00  from holding Federated Total Return or generate 2.16% return on investment over 90 days.

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

Federated Total Return  vs.  Janus Short Term Bond

Federated Total Return

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Total Return are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Total 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

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Short Term Bond are ranked lower than 12 (%) 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 Federated Total and Janus Short-term

The main advantage of trading using opposite Federated Total and Janus Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Total 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 Federated Total Return 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.