Correlation Between Janus Henderson and First Trust
Can any of the company-specific risk be diversified away by investing in both Janus Henderson and First Trust 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 Henderson and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Janus Henderson Small and First Trust Small, you can compare the effects of market volatilities on Janus Henderson and First Trust 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 Henderson with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janus Henderson and First Trust.
Diversification Opportunities for Janus Henderson and First Trust
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Janus and First is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Janus Henderson Small and First Trust Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Small and Janus Henderson 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 Henderson Small are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Small has no effect on the direction of Janus Henderson i.e., Janus Henderson and First Trust go up and down completely randomly.
Pair Corralation between Janus Henderson and First Trust
Given the investment horizon of 90 days Janus Henderson Small is expected to generate 1.09 times more return on investment than First Trust. However, Janus Henderson is 1.09 times more volatile than First Trust Small. It trades about 0.04 of its potential returns per unit of risk. First Trust Small is currently generating about 0.03 per unit of risk. If you would invest 4,649 in Janus Henderson Small on January 25, 2024 and sell it today you would earn a total of 1,122 from holding Janus Henderson Small or generate 24.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Janus Henderson Small vs. First Trust Small
Performance |
| Timeline |
| Janus Henderson Small |
| First Trust Small |
Janus Henderson and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Janus Henderson and First Trust
The main advantage of trading using opposite Janus Henderson and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Janus Henderson position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Janus Henderson vs. Vanguard Mid Cap Growth | Janus Henderson vs. Vanguard Small Cap Value | Janus Henderson vs. Vanguard Mid Cap Value | Janus Henderson vs. Vanguard Growth Index |
| First Trust vs. Vanguard Mid Cap Growth | First Trust vs. Vanguard Small Cap Value | First Trust vs. Vanguard Mid Cap Value | First Trust vs. Vanguard Growth Index |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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