Can any of the company-specific risk be diversified away by investing in both Bondbloxx ETF and Janus Asia 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 Bondbloxx ETF and Janus Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bondbloxx ETF Trust and Janus Asia Equity, you can compare the effects of market volatilities on Bondbloxx ETF and Janus Asia 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 Bondbloxx ETF with a short position of Janus Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bondbloxx ETF and Janus Asia.
Diversification Opportunities for Bondbloxx ETF and Janus Asia
The 3 months correlation between Bondbloxx and Janus is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bondbloxx ETF Trust and JANUS ASIA EQUITY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Asia Equity and Bondbloxx ETF 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 Bondbloxx ETF Trust are associated (or correlated) with Janus Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Asia Equity has no effect on the direction of Bondbloxx ETF i.e., Bondbloxx ETF and Janus Asia go up and down completely randomly.
Pair Corralation between Bondbloxx ETF and Janus Asia
Given the investment horizon of 90 days Bondbloxx ETF is expected to generate 3.51 times less return on investment than Janus Asia. But when comparing it to its historical volatility, Bondbloxx ETF Trust is 4.46 times less risky than Janus Asia. It trades about 0.29 of its potential returns per unit of risk. Janus Asia Equity is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 914.00 in Janus Asia Equity on September 3, 2023 and sell it today you would earn a total of 39.00 from holding Janus Asia Equity or generate 4.27% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Bondbloxx ETF Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Bondbloxx ETF is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the insiders.
Compared to the overall equity markets, risk-adjusted returns on investments in Janus Asia Equity are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Janus Asia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
The main advantage of trading using opposite Bondbloxx ETF and Janus Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bondbloxx ETF position performs unexpectedly, Janus Asia 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 Asia will offset losses from the drop in Janus Asia's long position.
The idea behind Bondbloxx ETF Trust and Janus Asia Equity 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.
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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