Correlation Between Janus Balanced and Bridge Builder

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

Diversification Opportunities for Janus Balanced and Bridge Builder

0.85

Correlation Coefficient

Janus Balanced  Bridge Builder

Very poor diversification

The 3 months correlation between Janus and Bridge is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Janus Balanced Fund and Bridge Builder Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Builder Trust 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 Bridge Builder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Builder Trust has no effect on the direction of Janus Balanced i.e., Janus Balanced and Bridge Builder go up and down completely randomly.

Pair Corralation between Janus Balanced and Bridge Builder

Assuming the 90 days horizon Janus Balanced Fund is expected to under-perform the Bridge Builder. In addition to that, Janus Balanced is 1.24 times more volatile than Bridge Builder Trust. It trades about -0.02 of its total potential returns per unit of risk. Bridge Builder Trust is currently generating about 0.2 per unit of volatility. If you would invest  1,411  in Bridge Builder Trust on September 12, 2024 and sell it today you would earn a total of  116.00  from holding Bridge Builder Trust or generate 8.22% return on investment over 90 days.

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

Janus Balanced Fund  vs.  Bridge Builder Trust

Janus Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bridge Builder Trust

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with Janus Balanced and Bridge Builder

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

The idea behind Janus Balanced Fund and Bridge Builder Trust 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.