Correlation Between Janus Detroit and PENSKE

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

By analyzing existing cross correlation between Janus Detroit Street and PENSKE AUTOMOTIVE GROUP, you can compare the effects of market volatilities on Janus Detroit and PENSKE 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 Detroit with a short position of PENSKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janus Detroit and PENSKE.

Diversification Opportunities for Janus Detroit and PENSKE

-0.42

Correlation Coefficient

Janus Detroit  PENSKE

Very good diversification

The 3 months correlation between Janus and PENSKE is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Janus Detroit Street and PENSKE AUTOMOTIVE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENSKE AUTOMOTIVE and Janus Detroit 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 Detroit Street are associated (or correlated) with PENSKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENSKE AUTOMOTIVE has no effect on the direction of Janus Detroit i.e., Janus Detroit and PENSKE go up and down completely randomly.

Pair Corralation between Janus Detroit and PENSKE

Given the investment horizon of 90 days Janus Detroit Street is expected to generate 0.5 times more return on investment than PENSKE. However, Janus Detroit Street is 1.99 times less risky than PENSKE. It trades about 0.26 of its potential returns per unit of risk. PENSKE AUTOMOTIVE GROUP is currently generating about -0.07 per unit of risk. If you would invest  4,803  in Janus Detroit Street on September 24, 2024 and sell it today you would earn a total of  110.00  from holding Janus Detroit Street or generate 2.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Janus Detroit Street  vs.  PENSKE AUTOMOTIVE GROUP

Janus Detroit Street

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Detroit Street are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Janus Detroit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PENSKE AUTOMOTIVE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PENSKE AUTOMOTIVE GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PENSKE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Janus Detroit and PENSKE

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

The idea behind Janus Detroit Street and PENSKE AUTOMOTIVE GROUP 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.