Correlation Between First Trust and Janus Henderson
Can any of the company-specific risk be diversified away by investing in both First Trust and Janus Henderson 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 First Trust and Janus Henderson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust International and Janus Henderson SmallMid, you can compare the effects of market volatilities on First Trust and Janus Henderson 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 First Trust with a short position of Janus Henderson. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Janus Henderson.
Diversification Opportunities for First Trust and Janus Henderson
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Janus is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding First Trust International and Janus Henderson SmallMid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Henderson SmallMid and First Trust 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 First Trust International are associated (or correlated) with Janus Henderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Henderson SmallMid has no effect on the direction of First Trust i.e., First Trust and Janus Henderson go up and down completely randomly.
Pair Corralation between First Trust and Janus Henderson
Given the investment horizon of 90 days First Trust International is expected to generate 1.72 times more return on investment than Janus Henderson. However, First Trust is 1.72 times more volatile than Janus Henderson SmallMid. It trades about 0.28 of its potential returns per unit of risk. Janus Henderson SmallMid is currently generating about -0.05 per unit of risk. If you would invest 4,890 in First Trust International on November 18, 2024 and sell it today you would earn a total of 378.00 from holding First Trust International or generate 7.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust International vs. Janus Henderson SmallMid
Performance |
| Timeline |
| First Trust International |
| Janus Henderson SmallMid |
First Trust and Janus Henderson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Janus Henderson
The main advantage of trading using opposite First Trust and Janus Henderson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Janus Henderson 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 Henderson will offset losses from the drop in Janus Henderson's long position.| First Trust vs. First Trust Mid | First Trust vs. First Trust Emerging | First Trust vs. First Trust Emerging | First Trust vs. First Trust SSI |
| Janus Henderson vs. Janus Henderson Small | Janus Henderson vs. First Trust Mid | Janus Henderson vs. First Trust Multi | Janus Henderson vs. ClearBridge Large Cap |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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