Correlation Between Janus Forty and Applied Finance
Can any of the company-specific risk be diversified away by investing in both Janus Forty and Applied Finance 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 Janus Forty and Applied Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Janus Forty Fund and Applied Finance Explorer, you can compare the effects of market volatilities on Janus Forty and Applied Finance 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 Janus Forty with a short position of Applied Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janus Forty and Applied Finance.
Diversification Opportunities for Janus Forty and Applied Finance
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Janus and Applied is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Janus Forty Fund and Applied Finance Explorer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Finance Explorer and Janus Forty 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 Janus Forty Fund are associated (or correlated) with Applied Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Finance Explorer has no effect on the direction of Janus Forty i.e., Janus Forty and Applied Finance go up and down completely randomly.
Pair Corralation between Janus Forty and Applied Finance
Assuming the 90 days horizon Janus Forty is expected to generate 1.07 times less return on investment than Applied Finance. But when comparing it to its historical volatility, Janus Forty Fund is 1.54 times less risky than Applied Finance. It trades about 0.09 of its potential returns per unit of risk. Applied Finance Explorer is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,773 in Applied Finance Explorer on August 31, 2024 and sell it today you would earn a total of 675.00 from holding Applied Finance Explorer or generate 38.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Janus Forty Fund vs. Applied Finance Explorer
Performance |
| Timeline |
| Janus Forty Fund |
| Applied Finance Explorer |
Janus Forty and Applied Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Janus Forty and Applied Finance
The main advantage of trading using opposite Janus Forty and Applied Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Janus Forty position performs unexpectedly, Applied Finance 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 Applied Finance will offset losses from the drop in Applied Finance's long position.| Janus Forty vs. Janus Overseas Fund | Janus Forty vs. Janus Enterprise Fund | Janus Forty vs. The Hartford Growth | Janus Forty vs. Mfs Research International |
| Applied Finance vs. Firsthand Alternative Energy | Applied Finance vs. Short Oil Gas | Applied Finance vs. Fidelity Advisor Energy | Applied Finance vs. Jennison Natural Resources |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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