Correlation Between Trex and Janus International

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

By analyzing existing cross correlation between Trex Company and Janus International Group, you can compare the effects of market volatilities on Trex and Janus International 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 Trex with a short position of Janus International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trex and Janus International.

Diversification Opportunities for Trex and Janus International

-0.32

Correlation Coefficient

Trex  Janus International

Very good diversification

The 3 months correlation between Trex and Janus is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Trex Company and Janus International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus International and Trex 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 Trex Company are associated (or correlated) with Janus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus International has no effect on the direction of Trex i.e., Trex and Janus International go up and down completely randomly.

Pair Corralation between Trex and Janus International

Given the investment horizon of 90 days Trex Company is expected to under-perform the Janus International. But the stock apears to be less risky and, when comparing its historical volatility, Trex Company is 1.35 times less risky than Janus International. The stock trades about -0.09 of its potential returns per unit of risk. The Janus International Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  736.00  in Janus International Group on December 27, 2024 and sell it today you would earn a total of  50.00  from holding Janus International Group or generate 6.79% return on investment over 90 days.

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

Trex Company  vs.  Janus International Group

Trex Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trex Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Janus International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Janus International Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental drivers, Janus International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Trex and Janus International

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

The idea behind Trex Company and Janus International Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.