Correlation Between Vanguard Financials and Janus Global
Can any of the company-specific risk be diversified away by investing in both Vanguard Financials and Janus Global 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 Vanguard Financials and Janus Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Financials Index and Janus Global Bond, you can compare the effects of market volatilities on Vanguard Financials and Janus Global 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 Vanguard Financials with a short position of Janus Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Financials and Janus Global.
Diversification Opportunities for Vanguard Financials and Janus Global
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Janus is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Financials Index and Janus Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Global Bond and Vanguard Financials 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 Vanguard Financials Index are associated (or correlated) with Janus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Global Bond has no effect on the direction of Vanguard Financials i.e., Vanguard Financials and Janus Global go up and down completely randomly.
Pair Corralation between Vanguard Financials and Janus Global
Assuming the 90 days horizon Vanguard Financials Index is expected to generate 2.05 times more return on investment than Janus Global. However, Vanguard Financials is 2.05 times more volatile than Janus Global Bond. It trades about 0.07 of its potential returns per unit of risk. Janus Global Bond is currently generating about -0.04 per unit of risk. If you would invest 4,207 in Vanguard Financials Index on October 7, 2024 and sell it today you would earn a total of 1,754 from holding Vanguard Financials Index or generate 41.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 26.41% |
| Values | Daily Returns |
Vanguard Financials Index vs. Janus Global Bond
Performance |
| Timeline |
| Vanguard Financials Index |
| Janus Global Bond |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Vanguard Financials and Janus Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Financials and Janus Global
The main advantage of trading using opposite Vanguard Financials and Janus Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Financials position performs unexpectedly, Janus Global 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 Global will offset losses from the drop in Janus Global's long position.The idea behind Vanguard Financials Index and Janus Global Bond 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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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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