Correlation Between Masco and Janus International

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

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

Diversification Opportunities for Masco and Janus International

-0.58

Correlation Coefficient

Masco  Janus International

Excellent diversification

The 3 months correlation between Masco and Janus is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Masco and Janus International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus International and Masco 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 Masco are associated (or correlated) with Janus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus International has no effect on the direction of Masco i.e., Masco and Janus International go up and down completely randomly.

Pair Corralation between Masco and Janus International

Considering the 90-day investment horizon Masco is expected to generate 0.42 times more return on investment than Janus International. However, Masco is 2.4 times less risky than Janus International. It trades about 0.39 of its potential returns per unit of risk. Janus International Group is currently generating about -0.06 per unit of risk. If you would invest  7,732  in Masco on July 11, 2024 and sell it today you would earn a total of  589.00  from holding Masco or generate 7.62% return on investment over 90 days.

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

Masco  vs.  Janus International Group

Masco

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Masco are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Masco unveiled solid returns over the last few months and may actually be approaching a breakup point.

Janus International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in November 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Masco and Janus International

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

The idea behind Masco and Janus International 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.