Correlation Between Dow Jones and Janus Flexible
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Janus Flexible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Janus Flexible Bond, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Janus Flexible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Janus Flexible.
Diversification Opportunities for Dow Jones and Janus Flexible
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Janus is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Janus Flexible go up and down completely randomly.
Pair Corralation between Dow Jones and Janus Flexible
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Janus Flexible. In addition to that, Dow Jones is 2.2 times more volatile than Janus Flexible Bond. It trades about -0.22 of its total potential returns per unit of risk. Janus Flexible Bond is currently generating about 0.17 per unit of volatility. If you would invest 919.00 in Janus Flexible Bond on November 27, 2024 and sell it today you would earn a total of 9.00 from holding Janus Flexible Bond or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Janus Flexible Bond
Performance |
| Timeline |
Dow Jones and Janus Flexible Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Janus Flexible Bond
Pair trading matchups for Janus Flexible
Pair Trading with Dow Jones and Janus Flexible
The main advantage of trading using opposite Dow Jones and Janus Flexible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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 Dow Jones Industrial 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.| Janus Flexible vs. Janus Balanced Fund | Janus Flexible vs. Janus Triton Fund | Janus Flexible vs. Ivy High Income | Janus Flexible vs. Janus Forty Fund |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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