Correlation Between Visa and Janus Henderson

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

By analyzing existing cross correlation between Visa Class A and Janus Henderson Group, you can compare the effects of market volatilities on Visa and Janus Henderson 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 Visa with a short position of Janus Henderson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Janus Henderson.

Diversification Opportunities for Visa and Janus Henderson

0.41

Correlation Coefficient

Visa  Janus Henderson

Very weak diversification

The 3 months correlation between Visa and Janus is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Janus Henderson Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Henderson Group and Visa 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 Visa Class A are associated (or correlated) with Janus Henderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Henderson Group has no effect on the direction of Visa i.e., Visa and Janus Henderson go up and down completely randomly.

Pair Corralation between Visa and Janus Henderson

Taking into account the 90-day investment horizon Visa is expected to generate 1.36 times less return on investment than Janus Henderson. But when comparing it to its historical volatility, Visa Class A is 1.84 times less risky than Janus Henderson. It trades about 0.08 of its potential returns per unit of risk. Janus Henderson Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,364  in Janus Henderson Group on January 31, 2024 and sell it today you would earn a total of  787.00  from holding Janus Henderson Group or generate 33.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Janus Henderson Group

Visa Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visa Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Janus Henderson Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Henderson Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Janus Henderson may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Visa and Janus Henderson

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

The idea behind Visa Class A and Janus Henderson Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.