Correlation Between Janus International and Owens Corning

Can any of the company-specific risk be diversified away by investing in both Janus International and Owens Corning 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 Owens Corning 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 Owens Corning, you can compare the effects of market volatilities on Janus International and Owens Corning 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 Owens Corning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janus International and Owens Corning.

Diversification Opportunities for Janus International and Owens Corning

-0.35

Correlation Coefficient

Janus International  Owens Corning

Very good diversification

The 3 months correlation between Janus and Owens is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Janus International Group and Owens Corning in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Owens Corning 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 Owens Corning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Owens Corning has no effect on the direction of Janus International i.e., Janus International and Owens Corning go up and down completely randomly.

Pair Corralation between Janus International and Owens Corning

Considering the 90-day investment horizon Janus International is expected to generate 1.17 times less return on investment than Owens Corning. In addition to that, Janus International is 1.26 times more volatile than Owens Corning. It trades about 0.13 of its total potential returns per unit of risk. Owens Corning is currently generating about 0.19 per unit of volatility. If you would invest  12,137  in Owens Corning on February 6, 2024 and sell it today you would earn a total of  5,604  from holding Owens Corning or generate 46.17% return on investment over 90 days.

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

Janus International Group  vs.  Owens Corning

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 recent stock price confusion, may contribute to short-horizon losses for the traders.

Owens Corning

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Owens Corning are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Owens Corning exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Janus International and Owens Corning

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

The idea behind Janus International Group and Owens Corning 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.