Correlation Between First Trust and Janus Detroit
Can any of the company-specific risk be diversified away by investing in both First Trust and Janus Detroit 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 Detroit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Enhanced and Janus Detroit Street, you can compare the effects of market volatilities on First Trust and Janus Detroit 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 Detroit. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Janus Detroit.
Diversification Opportunities for First Trust and Janus Detroit
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Janus is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Enhanced and Janus Detroit Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Detroit Street 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 Enhanced are associated (or correlated) with Janus Detroit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Detroit Street has no effect on the direction of First Trust i.e., First Trust and Janus Detroit go up and down completely randomly.
Pair Corralation between First Trust and Janus Detroit
Given the investment horizon of 90 days First Trust is expected to generate 1.6 times less return on investment than Janus Detroit. But when comparing it to its historical volatility, First Trust Enhanced is 1.42 times less risky than Janus Detroit. It trades about 0.55 of its potential returns per unit of risk. Janus Detroit Street is currently generating about 0.61 of returns per unit of risk over similar time horizon. If you would invest 4,530 in Janus Detroit Street on August 31, 2024 and sell it today you would earn a total of 566.00 from holding Janus Detroit Street or generate 12.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
First Trust Enhanced vs. Janus Detroit Street
Performance |
| Timeline |
| First Trust Enhanced |
| Janus Detroit Street |
First Trust and Janus Detroit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Janus Detroit
The main advantage of trading using opposite First Trust and Janus Detroit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Janus Detroit 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 Detroit will offset losses from the drop in Janus Detroit's long position.| First Trust vs. First Trust Low | First Trust vs. First Trust Senior | First Trust vs. First Trust TCW | First Trust vs. First Trust Tactical |
| Janus Detroit vs. iShares Interest Rate | Janus Detroit vs. iShares Interest Rate | Janus Detroit vs. iShares Edge Investment | Janus Detroit vs. iShares Inflation Hedged |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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