Correlation Between Metropolitan West and Janus Global

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

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

Diversification Opportunities for Metropolitan West and Janus Global

0.67

Correlation Coefficient

Metropolitan West  Janus Global

Poor diversification

The 3 months correlation between Metropolitan and Janus is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Porate and Janus Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Global Technology and Metropolitan West 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 Metropolitan West Porate are associated (or correlated) with Janus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Global Technology has no effect on the direction of Metropolitan West i.e., Metropolitan West and Janus Global go up and down completely randomly.

Pair Corralation between Metropolitan West and Janus Global

Assuming the 90 days horizon Metropolitan West Porate is expected to generate 43.42 times more return on investment than Janus Global. However, Metropolitan West is 43.42 times more volatile than Janus Global Technology. It trades about 0.13 of its potential returns per unit of risk. Janus Global Technology is currently generating about 0.15 per unit of risk. If you would invest  900.00  in Metropolitan West Porate on September 3, 2024 and sell it today you would earn a total of  3,625  from holding Metropolitan West Porate or generate 402.78% return on investment over 90 days.

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

Metropolitan West Porate  vs.  Janus Global Technology

Metropolitan West Porate

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metropolitan West Porate are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Metropolitan West showed solid returns over the last few months and may actually be approaching a breakup point.

Janus Global Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Global Technology are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Janus Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Metropolitan West and Janus Global

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

The idea behind Metropolitan West Porate and Janus Global Technology 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.