Correlation Between Janus Balanced and Janus Contrarian

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

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

Diversification Opportunities for Janus Balanced and Janus Contrarian

0.95

Correlation Coefficient

Janus Balanced  Janus Contrarian

Almost no diversification

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

Pair Corralation between Janus Balanced and Janus Contrarian

Assuming the 90 days horizon Janus Balanced is expected to generate 2.2 times less return on investment than Janus Contrarian. But when comparing it to its historical volatility, Janus Balanced Fund is 2.02 times less risky than Janus Contrarian. It trades about 0.17 of its potential returns per unit of risk. Janus Trarian Fund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,885  in Janus Trarian Fund on August 31, 2024 and sell it today you would earn a total of  348.00  from holding Janus Trarian Fund or generate 12.06% return on investment over 90 days.

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

Janus Balanced Fund  vs.  Janus Trarian Fund

Janus Balanced

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Balanced Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Janus Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Janus Contrarian

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Trarian Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Janus Contrarian may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Janus Balanced and Janus Contrarian

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

The idea behind Janus Balanced Fund and Janus Trarian 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.