Correlation Between MicroSectors FANG and Janus

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Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Janus 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 MicroSectors FANG and Janus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG Index and Janus, you can compare the effects of market volatilities on MicroSectors FANG and Janus 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 MicroSectors FANG with a short position of Janus. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Janus.

Diversification Opportunities for MicroSectors FANG and Janus

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between MicroSectors and Janus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Janus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus and MicroSectors FANG 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 MicroSectors FANG Index are associated (or correlated) with Janus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Janus go up and down completely randomly.

Pair Corralation between MicroSectors FANG and Janus

If you would invest (100.00) in Janus on September 12, 2024 and sell it today you would earn a total of  100.00  from holding Janus or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

MicroSectors FANG Index  vs.  Janus

 Performance 
       Timeline  
MicroSectors FANG Index 

Risk-Adjusted Performance

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Over the last 90 days MicroSectors FANG Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.
Janus 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Janus has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Janus is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

MicroSectors FANG and Janus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MicroSectors FANG and Janus

The main advantage of trading using opposite MicroSectors FANG and Janus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Janus 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 will offset losses from the drop in Janus' long position.
The idea behind MicroSectors FANG Index and Janus 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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