Correlation Between Bank of America and Janus Multi

Can any of the company-specific risk be diversified away by investing in both Bank of America and Janus Multi 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 Bank of America and Janus Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of America and Janus Multi Sector Income, you can compare the effects of market volatilities on Bank of America and Janus Multi 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 Bank of America with a short position of Janus Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Janus Multi.

Diversification Opportunities for Bank of America and Janus Multi

0.39

Correlation Coefficient

Bank of America  Janus Multi

Weak diversification

The 3 months correlation between Bank and Janus is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Janus Multi Sector Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Multi Sector and Bank of America 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 Bank of America are associated (or correlated) with Janus Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Multi Sector has no effect on the direction of Bank of America i.e., Bank of America and Janus Multi go up and down completely randomly.

Pair Corralation between Bank of America and Janus Multi

Considering the 90-day investment horizon Bank of America is expected to generate 4.61 times more return on investment than Janus Multi. However, Bank of America is 4.61 times more volatile than Janus Multi Sector Income. It trades about 0.08 of its potential returns per unit of risk. Janus Multi Sector Income is currently generating about 0.07 per unit of risk. If you would invest  3,058  in Bank of America on January 31, 2024 and sell it today you would earn a total of  643.00  from holding Bank of America or generate 21.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.46%
Values	Daily Returns

Bank of America  vs.  Janus Multi Sector Income

Bank of America

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of America are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Bank of America may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Janus Multi Sector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus Multi Sector Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Janus Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank of America and Janus Multi

The main advantage of trading using opposite Bank of America and Janus Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Janus Multi 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 Multi will offset losses from the drop in Janus Multi's long position.

The idea behind Bank of America and Janus Multi Sector Income 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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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 CEOs Directory module to screen CEOs from public companies around the world.