Correlation Between Janus Henderson and Ares Capital

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

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

Diversification Opportunities for Janus Henderson and Ares Capital

0.86

Correlation Coefficient

Janus Henderson  Ares Capital

Very poor diversification

The 3 months correlation between Janus and Ares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Janus Henderson Group and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital and Janus Henderson 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 Henderson Group are associated (or correlated) with Ares Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Capital has no effect on the direction of Janus Henderson i.e., Janus Henderson and Ares Capital go up and down completely randomly.

Pair Corralation between Janus Henderson and Ares Capital

Considering the 90-day investment horizon Janus Henderson Group is expected to generate 3.14 times more return on investment than Ares Capital. However, Janus Henderson is 3.14 times more volatile than Ares Capital. It trades about 0.2 of its potential returns per unit of risk. Ares Capital is currently generating about 0.5 per unit of risk. If you would invest  4,119  in Janus Henderson Group on September 5, 2024 and sell it today you would earn a total of  314.00  from holding Janus Henderson Group or generate 7.62% return on investment over 90 days.

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

Janus Henderson Group  vs.  Ares Capital

Janus Henderson Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Henderson Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, Janus Henderson reported solid returns over the last few months and may actually be approaching a breakup point.

Ares Capital

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Capital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Ares Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Janus Henderson and Ares Capital

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

The idea behind Janus Henderson Group and Ares Capital 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.