Correlation Between Johnson Controls and Aecom Technology
Can any of the company-specific risk be diversified away by investing in both Johnson Controls and Aecom Technology 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 Johnson Controls and Aecom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Controls International and Aecom Technology, you can compare the effects of market volatilities on Johnson Controls and Aecom Technology 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 Johnson Controls with a short position of Aecom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Controls and Aecom Technology.
Diversification Opportunities for Johnson Controls and Aecom Technology
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Johnson and Aecom is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Controls International and Aecom Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecom Technology and Johnson Controls 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 Johnson Controls International are associated (or correlated) with Aecom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecom Technology has no effect on the direction of Johnson Controls i.e., Johnson Controls and Aecom Technology go up and down completely randomly.
Pair Corralation between Johnson Controls and Aecom Technology
Considering the 90-day investment horizon Johnson Controls International is expected to generate 1.18 times more return on investment than Aecom Technology. However, Johnson Controls is 1.18 times more volatile than Aecom Technology. It trades about 0.19 of its potential returns per unit of risk. Aecom Technology is currently generating about 0.08 per unit of risk. If you would invest 5,490 in Johnson Controls International on January 21, 2024 and sell it today you would earn a total of 876.00 from holding Johnson Controls International or generate 15.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Controls International vs. Aecom Technology
Performance |
| Timeline |
| Johnson Controls Int |
| Aecom Technology |
Johnson Controls and Aecom Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Controls and Aecom Technology
The main advantage of trading using opposite Johnson Controls and Aecom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Controls position performs unexpectedly, Aecom Technology 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 Aecom Technology will offset losses from the drop in Aecom Technology's long position.| Johnson Controls vs. Carrier GlobalCorp | Johnson Controls vs. Lennox International | Johnson Controls vs. Masco | Johnson Controls vs. Carlisle Companies Incorporated |
| Aecom Technology vs. Quanta Services | Aecom Technology vs. KBR Inc | Aecom Technology vs. Fluor | Aecom Technology vs. Tetra Tech |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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