Correlation Between Flexible Bond and Janus Forty

Can any of the company-specific risk be diversified away by investing in both Flexible Bond and Janus Forty 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 Forty 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 Forty Fund, you can compare the effects of market volatilities on Flexible Bond and Janus Forty 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 Forty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Bond and Janus Forty.

Diversification Opportunities for Flexible Bond and Janus Forty

-0.68

Correlation Coefficient

Flexible Bond  Janus Forty

Excellent diversification

The 3 months correlation between Flexible and Janus is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Bond Portfolio and Janus Forty Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Forty Fund 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 Forty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Forty Fund has no effect on the direction of Flexible Bond i.e., Flexible Bond and Janus Forty go up and down completely randomly.

Pair Corralation between Flexible Bond and Janus Forty

Assuming the 90 days horizon Flexible Bond Portfolio is expected to under-perform the Janus Forty. But the mutual fund apears to be less risky and, when comparing its historical volatility, Flexible Bond Portfolio is 2.81 times less risky than Janus Forty. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Janus Forty Fund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  5,209  in Janus Forty Fund on September 4, 2024 and sell it today you would earn a total of  584.00  from holding Janus Forty Fund or generate 11.21% return on investment over 90 days.

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

Flexible Bond Portfolio  vs.  Janus Forty Fund

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 Forty Fund

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Forty Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Janus Forty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Flexible Bond and Janus Forty

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

The idea behind Flexible Bond Portfolio and Janus Forty 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.