Correlation Between Janus International and Aspen Aerogels

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

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

Diversification Opportunities for Janus International and Aspen Aerogels

-0.7

Correlation Coefficient

Janus International  Aspen Aerogels

Excellent diversification

The 3 months correlation between Janus and Aspen is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Janus International Group and Aspen Aerogels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Aerogels and Janus 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 Janus International Group are associated (or correlated) with Aspen Aerogels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Aerogels has no effect on the direction of Janus International i.e., Janus International and Aspen Aerogels go up and down completely randomly.

Pair Corralation between Janus International and Aspen Aerogels

Considering the 90-day investment horizon Janus International is expected to generate 3.3 times less return on investment than Aspen Aerogels. But when comparing it to its historical volatility, Janus International Group is 2.47 times less risky than Aspen Aerogels. It trades about 0.03 of its potential returns per unit of risk. Aspen Aerogels is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,752  in Aspen Aerogels on February 17, 2024 and sell it today you would earn a total of  886.00  from holding Aspen Aerogels or generate 50.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Janus International Group  vs.  Aspen Aerogels

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.

Aspen Aerogels

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Aerogels are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Aspen Aerogels displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Janus International and Aspen Aerogels

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

The idea behind Janus International Group and Aspen Aerogels 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.