Correlation Between Amer Beacon and Janus Enterprise

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

By analyzing existing cross correlation between Amer Beacon Ark and Janus Enterprise 529, you can compare the effects of market volatilities on Amer Beacon and Janus Enterprise 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 Amer Beacon with a short position of Janus Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amer Beacon and Janus Enterprise.

Diversification Opportunities for Amer Beacon and Janus Enterprise

0.92

Correlation Coefficient

Amer Beacon  Janus Enterprise

Almost no diversification

The 3 months correlation between Amer and Janus is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Amer Beacon Ark and Janus Enterprise 529 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Enterprise 529 and Amer Beacon 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 Amer Beacon Ark are associated (or correlated) with Janus Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Enterprise 529 has no effect on the direction of Amer Beacon i.e., Amer Beacon and Janus Enterprise go up and down completely randomly.

Pair Corralation between Amer Beacon and Janus Enterprise

Assuming the 90 days horizon Amer Beacon Ark is expected to generate 3.04 times more return on investment than Janus Enterprise. However, Amer Beacon is 3.04 times more volatile than Janus Enterprise 529. It trades about 0.21 of its potential returns per unit of risk. Janus Enterprise 529 is currently generating about 0.11 per unit of risk. If you would invest  1,269  in Amer Beacon Ark on September 17, 2024 and sell it today you would earn a total of  419.00  from holding Amer Beacon Ark or generate 33.02% return on investment over 90 days.

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

Amer Beacon Ark  vs.  Janus Enterprise 529

Amer Beacon Ark

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amer Beacon Ark are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Amer Beacon showed solid returns over the last few months and may actually be approaching a breakup point.

Janus Enterprise 529

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Enterprise 529 are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Janus Enterprise is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amer Beacon and Janus Enterprise

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

The idea behind Amer Beacon Ark and Janus Enterprise 529 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.