Correlation Between Smallcap Value and Janus Enterprise

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

By analyzing existing cross correlation between Smallcap Value Fund and Janus Enterprise 529, you can compare the effects of market volatilities on Smallcap Value and Janus Enterprise 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 Smallcap Value with a short position of Janus Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Value and Janus Enterprise.

Diversification Opportunities for Smallcap Value and Janus Enterprise

0.66

Correlation Coefficient

Smallcap Value  Janus Enterprise

Poor diversification

The 3 months correlation between Smallcap and Janus is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Value Fund and Janus Enterprise 529 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Enterprise 529 and Smallcap Value 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 Smallcap Value Fund are associated (or correlated) with Janus Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Enterprise 529 has no effect on the direction of Smallcap Value i.e., Smallcap Value and Janus Enterprise go up and down completely randomly.

Pair Corralation between Smallcap Value and Janus Enterprise

Assuming the 90 days horizon Smallcap Value Fund is expected to generate 1.82 times more return on investment than Janus Enterprise. However, Smallcap Value is 1.82 times more volatile than Janus Enterprise 529. It trades about 0.12 of its potential returns per unit of risk. Janus Enterprise 529 is currently generating about 0.11 per unit of risk. If you would invest  1,222  in Smallcap Value Fund on September 17, 2024 and sell it today you would earn a total of  94.00  from holding Smallcap Value Fund or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	79.69%
Values	Daily Returns

Smallcap Value Fund  vs.  Janus Enterprise 529

Smallcap Value

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Smallcap Value Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Smallcap Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Janus Enterprise 529

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Enterprise 529 are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Janus Enterprise is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Smallcap Value and Janus Enterprise

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

The idea behind Smallcap Value Fund and Janus Enterprise 529 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.