Correlation Between First Trust and Janus Henderson

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

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

Diversification Opportunities for First Trust and Janus Henderson

0.95

Correlation Coefficient

First Trust  Janus Henderson

Almost no diversification

The 3 months correlation between First and Janus is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Small and Janus Henderson Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Henderson Small and First Trust 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 First Trust Small are associated (or correlated) with Janus Henderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Henderson Small has no effect on the direction of First Trust i.e., First Trust and Janus Henderson go up and down completely randomly.

Pair Corralation between First Trust and Janus Henderson

Considering the 90-day investment horizon First Trust is expected to generate 1.58 times less return on investment than Janus Henderson. In addition to that, First Trust is 1.08 times more volatile than Janus Henderson Small. It trades about 0.12 of its total potential returns per unit of risk. Janus Henderson Small is currently generating about 0.21 per unit of volatility. If you would invest  6,186  in Janus Henderson Small on September 4, 2024 and sell it today you would earn a total of  1,118  from holding Janus Henderson Small or generate 18.07% return on investment over 90 days.

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

First Trust Small  vs.  Janus Henderson Small

First Trust Small

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Small are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Janus Henderson Small

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Henderson Small are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady primary indicators, Janus Henderson disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Trust and Janus Henderson

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

The idea behind First Trust Small and Janus Henderson Small 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.