Correlation Between Masonite International and Janus International

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

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

Diversification Opportunities for Masonite International and Janus International

-0.64

Correlation Coefficient

Masonite International  Janus International

Excellent diversification

The 3 months correlation between Masonite and Janus is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Masonite International Corp and Janus International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus International and Masonite International 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 Masonite International Corp 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 Masonite International i.e., Masonite International and Janus International go up and down completely randomly.

Pair Corralation between Masonite International and Janus International

Given the investment horizon of 90 days Masonite International Corp is expected to generate 1.13 times more return on investment than Janus International. However, Masonite International is 1.13 times more volatile than Janus International Group. It trades about 0.04 of its potential returns per unit of risk. Janus International Group is currently generating about 0.03 per unit of risk. If you would invest  9,183  in Masonite International Corp on February 17, 2024 and sell it today you would earn a total of  4,101  from holding Masonite International Corp or generate 44.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Masonite International Corp  vs.  Janus International Group

Masonite International

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Masonite International Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Masonite International is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Janus International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Janus International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Masonite International and Janus International

The main advantage of trading using opposite Masonite International and Janus International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masonite International 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 Masonite International Corp 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.