Correlation Between Flexible Bond and Janus Global

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

By analyzing existing cross correlation between Flexible Bond Portfolio and Janus Global Life, you can compare the effects of market volatilities on Flexible Bond and Janus Global 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 Flexible Bond with a short position of Janus Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Bond and Janus Global.

Diversification Opportunities for Flexible Bond and Janus Global

0.72

Correlation Coefficient

Flexible Bond  Janus Global

Poor diversification

The 3 months correlation between Flexible and JANUS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Bond Portfolio and Janus Global Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Global Life and Flexible Bond 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 Flexible Bond Portfolio are associated (or correlated) with Janus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Global Life has no effect on the direction of Flexible Bond i.e., Flexible Bond and Janus Global go up and down completely randomly.

Pair Corralation between Flexible Bond and Janus Global

Assuming the 90 days horizon Flexible Bond Portfolio is expected to generate 0.41 times more return on investment than Janus Global. However, Flexible Bond Portfolio is 2.46 times less risky than Janus Global. It trades about -0.05 of its potential returns per unit of risk. Janus Global Life is currently generating about -0.13 per unit of risk. If you would invest  1,028  in Flexible Bond Portfolio on September 4, 2024 and sell it today you would lose (11.00) from holding Flexible Bond Portfolio or give up 1.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Flexible Bond Portfolio  vs.  Janus Global Life

Flexible Bond Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Janus Global Life

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Flexible Bond and Janus Global

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

The idea behind Flexible Bond Portfolio and Janus Global Life 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.