Correlation Between Janus Forty and Alger Smallcap

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

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

Diversification Opportunities for Janus Forty and Alger Smallcap

0.38

Correlation Coefficient

Janus Forty  Alger Smallcap

Weak diversification

The 3 months correlation between Janus and Alger is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Janus Forty Fund and Alger Smallcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Smallcap Growth and Janus Forty 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 Janus Forty Fund are associated (or correlated) with Alger Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Smallcap Growth has no effect on the direction of Janus Forty i.e., Janus Forty and Alger Smallcap go up and down completely randomly.

Pair Corralation between Janus Forty and Alger Smallcap

Assuming the 90 days horizon Janus Forty Fund is expected to under-perform the Alger Smallcap. In addition to that, Janus Forty is 1.16 times more volatile than Alger Smallcap Growth. It trades about -0.02 of its total potential returns per unit of risk. Alger Smallcap Growth is currently generating about 0.1 per unit of volatility. If you would invest  1,078  in Alger Smallcap Growth on September 15, 2024 and sell it today you would earn a total of  85.00  from holding Alger Smallcap Growth or generate 7.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Janus Forty Fund  vs.  Alger Smallcap Growth

Janus Forty Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alger Smallcap Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Smallcap Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Smallcap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Janus Forty and Alger Smallcap

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

The idea behind Janus Forty Fund and Alger Smallcap Growth 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.