Correlation Between Ford and Janus High-yield
Can any of the company-specific risk be diversified away by investing in both Ford and Janus High-yield 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 Ford and Janus High-yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Janus High Yield Fund, you can compare the effects of market volatilities on Ford and Janus High-yield 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 Ford with a short position of Janus High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Janus High-yield.
Diversification Opportunities for Ford and Janus High-yield
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and Janus is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Janus High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus High Yield and Ford 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 Ford Motor are associated (or correlated) with Janus High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus High Yield has no effect on the direction of Ford i.e., Ford and Janus High-yield go up and down completely randomly.
Pair Corralation between Ford and Janus High-yield
Taking into account the 90-day investment horizon Ford Motor is expected to generate 11.82 times more return on investment than Janus High-yield. However, Ford is 11.82 times more volatile than Janus High Yield Fund. It trades about 0.19 of its potential returns per unit of risk. Janus High Yield Fund is currently generating about 0.26 per unit of risk. If you would invest 1,027 in Ford Motor on August 30, 2024 and sell it today you would earn a total of 83.00 from holding Ford Motor or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Janus High Yield Fund
Performance |
| Timeline |
| Ford Motor |
| Janus High Yield |
Ford and Janus High-yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Janus High-yield
The main advantage of trading using opposite Ford and Janus High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Janus High-yield 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 High-yield will offset losses from the drop in Janus High-yield's long position.The idea behind Ford Motor and Janus High Yield Fund 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 High-yield vs. Deutsche Floating Rate | Janus High-yield vs. Pimco Short Asset | Janus High-yield vs. High Yield Fund | Janus High-yield vs. Harding Loevner Frontier |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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