Correlation Between Main Street and Janus Henderson

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

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

Diversification Opportunities for Main Street and Janus Henderson

0.87

Correlation Coefficient

Main Street  Janus Henderson

Very poor diversification

The 3 months correlation between Main and Janus is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and Janus Henderson Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Henderson Group and Main Street 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 Main Street Capital are associated (or correlated) with Janus Henderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Henderson Group has no effect on the direction of Main Street i.e., Main Street and Janus Henderson go up and down completely randomly.

Pair Corralation between Main Street and Janus Henderson

Given the investment horizon of 90 days Main Street Capital is expected to generate 0.46 times more return on investment than Janus Henderson. However, Main Street Capital is 2.17 times less risky than Janus Henderson. It trades about 0.47 of its potential returns per unit of risk. Janus Henderson Group is currently generating about -0.09 per unit of risk. If you would invest  5,217  in Main Street Capital on September 12, 2024 and sell it today you would earn a total of  279.50  from holding Main Street Capital or generate 5.36% return on investment over 90 days.

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

Main Street Capital  vs.  Janus Henderson Group

Main Street Capital

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Main Street Capital are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Main Street displayed solid returns over the last few months and may actually be approaching a breakup point.

Janus Henderson Group

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Henderson Group are ranked lower than 20 (%) 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.

Pair Trading with Main Street and Janus Henderson

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

The idea behind Main Street Capital and Janus Henderson 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.