Correlation Between Janus Global and Franklin Biotechnology

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

By analyzing existing cross correlation between Janus Global Life and Franklin Biotechnology Discovery, you can compare the effects of market volatilities on Janus Global and Franklin Biotechnology 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 Global with a short position of Franklin Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janus Global and Franklin Biotechnology.

Diversification Opportunities for Janus Global and Franklin Biotechnology

0.73

Correlation Coefficient

Janus Global  Franklin Biotechnology

Poor diversification

The 3 months correlation between Janus and Franklin is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Janus Global Life and Franklin Biotechnology Discove in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Biotechnology and Janus Global 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 Global Life are associated (or correlated) with Franklin Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Biotechnology has no effect on the direction of Janus Global i.e., Janus Global and Franklin Biotechnology go up and down completely randomly.

Pair Corralation between Janus Global and Franklin Biotechnology

Assuming the 90 days horizon Janus Global Life is expected to under-perform the Franklin Biotechnology. But the mutual fund apears to be less risky and, when comparing its historical volatility, Janus Global Life is 1.56 times less risky than Franklin Biotechnology. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Franklin Biotechnology Discovery is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  14,688  in Franklin Biotechnology Discovery on September 1, 2024 and sell it today you would lose (510.00) from holding Franklin Biotechnology Discovery or give up 3.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Janus Global Life  vs.  Franklin Biotechnology Discove

Janus Global Life

Risk-Adjusted Performance

0 of 100

Very Weak

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

Franklin Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Janus Global and Franklin Biotechnology

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

The idea behind Janus Global Life and Franklin Biotechnology Discovery 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 Anywhere module to track or share privately all of your investments from the convenience of any device.