Correlation Between Janus Overseas and Janus Balanced

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

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

Diversification Opportunities for Janus Overseas and Janus Balanced

0.65

Correlation Coefficient

Janus Overseas  Janus Balanced

Poor diversification

The 3 months correlation between Janus and Janus is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Janus Overseas Fund and Janus Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Balanced and Janus Overseas 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 Janus Overseas Fund are associated (or correlated) with Janus Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Balanced has no effect on the direction of Janus Overseas i.e., Janus Overseas and Janus Balanced go up and down completely randomly.

Pair Corralation between Janus Overseas and Janus Balanced

Assuming the 90 days horizon Janus Overseas Fund is expected to generate 1.31 times more return on investment than Janus Balanced. However, Janus Overseas is 1.31 times more volatile than Janus Balanced Fund. It trades about 0.18 of its potential returns per unit of risk. Janus Balanced Fund is currently generating about 0.14 per unit of risk. If you would invest  4,239  in Janus Overseas Fund on February 15, 2024 and sell it today you would earn a total of  542.00  from holding Janus Overseas Fund or generate 12.79% return on investment over 90 days.

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

Janus Overseas Fund  vs.  Janus Balanced Fund

Janus Overseas

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Overseas Fund are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Janus Overseas may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Janus Balanced

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Balanced Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Janus Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Janus Overseas and Janus Balanced

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

The idea behind Janus Overseas Fund and Janus Balanced Fund 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .