Correlation Between Amcap Fund and Janus Enterprise

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

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

Diversification Opportunities for Amcap Fund and Janus Enterprise

0.93

Correlation Coefficient

Amcap Fund  Janus Enterprise

Almost no diversification

The 3 months correlation between Amcap and Janus is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Amcap Fund Class 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 Amcap Fund 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 Amcap Fund Class 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 Amcap Fund i.e., Amcap Fund and Janus Enterprise go up and down completely randomly.

Pair Corralation between Amcap Fund and Janus Enterprise

Assuming the 90 days horizon Amcap Fund Class is expected to generate 0.87 times more return on investment than Janus Enterprise. However, Amcap Fund Class is 1.15 times less risky than Janus Enterprise. It trades about 0.4 of its potential returns per unit of risk. Janus Enterprise 529 is currently generating about 0.2 per unit of risk. If you would invest  4,480  in Amcap Fund Class on September 17, 2024 and sell it today you would earn a total of  215.00  from holding Amcap Fund Class or generate 4.8% return on investment over 90 days.

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

Amcap Fund Class  vs.  Janus Enterprise 529

Amcap Fund Class

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amcap Fund Class are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Amcap Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Amcap Fund and Janus Enterprise

The main advantage of trading using opposite Amcap Fund and Janus Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amcap Fund 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 Amcap Fund Class 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.