Correlation Between Investec Global and Janus Global

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

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

Diversification Opportunities for Investec Global and Janus Global

0.02

Correlation Coefficient

Investec Global  Janus Global

Significant diversification

The 3 months correlation between Investec and Janus is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Investec Global Franchise and Janus Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Global Technology and Investec Global 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 Investec Global Franchise 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 Technology has no effect on the direction of Investec Global i.e., Investec Global and Janus Global go up and down completely randomly.

Pair Corralation between Investec Global and Janus Global

Assuming the 90 days horizon Investec Global is expected to generate 1.81 times less return on investment than Janus Global. But when comparing it to its historical volatility, Investec Global Franchise is 2.05 times less risky than Janus Global. It trades about 0.08 of its potential returns per unit of risk. Janus Global Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,477  in Janus Global Technology on September 14, 2024 and sell it today you would earn a total of  1,521  from holding Janus Global Technology or generate 43.74% return on investment over 90 days.

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

Investec Global Franchise  vs.  Janus Global Technology

Investec Global Franchise

Risk-Adjusted Performance

7 of 100

OK

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

Janus Global Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus Global Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental 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 Investec Global and Janus Global

The main advantage of trading using opposite Investec Global and Janus Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Global 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 Investec Global Franchise and Janus Global Technology 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.