Correlation Between Henderson Emerging and Janus Balanced

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

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

Diversification Opportunities for Henderson Emerging and Janus Balanced

-0.09

Correlation Coefficient

Henderson Emerging  Janus Balanced

Good diversification

The 3 months correlation between Henderson and Janus is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Henderson Emerging Markets and Janus Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Balanced and Henderson Emerging 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 Henderson Emerging Markets are associated (or correlated) with Janus Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Balanced has no effect on the direction of Henderson Emerging i.e., Henderson Emerging and Janus Balanced go up and down completely randomly.

Pair Corralation between Henderson Emerging and Janus Balanced

Assuming the 90 days horizon Henderson Emerging is expected to generate 1.83 times less return on investment than Janus Balanced. In addition to that, Henderson Emerging is 1.45 times more volatile than Janus Balanced Fund. It trades about 0.03 of its total potential returns per unit of risk. Janus Balanced Fund is currently generating about 0.08 per unit of volatility. If you would invest  3,624  in Janus Balanced Fund on September 21, 2024 and sell it today you would earn a total of  936.00  from holding Janus Balanced Fund or generate 25.83% return on investment over 90 days.

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

Henderson Emerging Markets  vs.  Janus Balanced Fund

Henderson Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Henderson Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Henderson Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Janus Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus Balanced Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Janus Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Henderson Emerging and Janus Balanced

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

The idea behind Henderson Emerging Markets and Janus Balanced Fund 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.