Correlation Between Long Term and Janus Flexible

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

By analyzing existing cross correlation between Long Term Government Fund and Janus Flexible Bond, you can compare the effects of market volatilities on Long Term and Janus Flexible 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 Long Term with a short position of Janus Flexible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long Term and Janus Flexible.

Diversification Opportunities for Long Term and Janus Flexible

0.99

Correlation Coefficient

Long Term  Janus Flexible

No risk reduction

The 3 months correlation between Long and Janus is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Long Term Government Fund and Janus Flexible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Flexible Bond and Long Term 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 Long Term Government Fund are associated (or correlated) with Janus Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Flexible Bond has no effect on the direction of Long Term i.e., Long Term and Janus Flexible go up and down completely randomly.

Pair Corralation between Long Term and Janus Flexible

Assuming the 90 days horizon Long Term is expected to generate 1.92 times less return on investment than Janus Flexible. In addition to that, Long Term is 2.31 times more volatile than Janus Flexible Bond. It trades about 0.02 of its total potential returns per unit of risk. Janus Flexible Bond is currently generating about 0.08 per unit of volatility. If you would invest  899.00  in Janus Flexible Bond on September 13, 2024 and sell it today you would earn a total of  36.00  from holding Janus Flexible Bond or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.32%
Values	Daily Returns

Long Term Government Fund  vs.  Janus Flexible Bond

Long Term Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Long Term Government Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Janus Flexible Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Long Term and Janus Flexible

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

The idea behind Long Term Government Fund and Janus Flexible Bond 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 Transaction History module to view history of all your transactions and understand their impact on performance.