Correlation Between Capital World and Janus Contrarian
Can any of the company-specific risk be diversified away by investing in both Capital World and Janus Contrarian 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 Capital World and Janus Contrarian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Growth and Janus Trarian Fund, you can compare the effects of market volatilities on Capital World and Janus Contrarian 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 Capital World with a short position of Janus Contrarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Janus Contrarian.
Diversification Opportunities for Capital World and Janus Contrarian
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Janus is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth and Janus Trarian Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Contrarian and Capital World 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 Capital World Growth are associated (or correlated) with Janus Contrarian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Contrarian has no effect on the direction of Capital World i.e., Capital World and Janus Contrarian go up and down completely randomly.
Pair Corralation between Capital World and Janus Contrarian
Assuming the 90 days horizon Capital World is expected to generate 1.51 times less return on investment than Janus Contrarian. But when comparing it to its historical volatility, Capital World Growth is 1.45 times less risky than Janus Contrarian. It trades about 0.12 of its potential returns per unit of risk. Janus Trarian Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,396 in Janus Trarian Fund on September 2, 2024 and sell it today you would earn a total of 854.00 from holding Janus Trarian Fund or generate 35.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Growth vs. Janus Trarian Fund
Performance |
| Timeline |
| Capital World Growth |
| Janus Contrarian |
Capital World and Janus Contrarian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Janus Contrarian
The main advantage of trading using opposite Capital World and Janus Contrarian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World position performs unexpectedly, Janus Contrarian 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 Contrarian will offset losses from the drop in Janus Contrarian's long position.| Capital World vs. Income Fund Of | Capital World vs. New World Fund | Capital World vs. American Mutual Fund | Capital World vs. American Mutual Fund |
| Janus Contrarian vs. Janus Global Select | Janus Contrarian vs. Janus Overseas Fund | Janus Contrarian vs. Janus Global Technology | Janus Contrarian vs. Janus Research Fund |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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