Correlation Between Johnson Controls and Fluor
Can any of the company-specific risk be diversified away by investing in both Johnson Controls and Fluor 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 Fluor 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 Fluor, you can compare the effects of market volatilities on Johnson Controls and Fluor 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 Fluor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Controls and Fluor.
Diversification Opportunities for Johnson Controls and Fluor
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Johnson and Fluor is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Controls International and Fluor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluor 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 Fluor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluor has no effect on the direction of Johnson Controls i.e., Johnson Controls and Fluor go up and down completely randomly.
Pair Corralation between Johnson Controls and Fluor
Considering the 90-day investment horizon Johnson Controls International is expected to generate 1.06 times more return on investment than Fluor. However, Johnson Controls is 1.06 times more volatile than Fluor. It trades about -0.09 of its potential returns per unit of risk. Fluor is currently generating about -0.19 per unit of risk. If you would invest 6,485 in Johnson Controls International on February 7, 2024 and sell it today you would lose (247.00) from holding Johnson Controls International or give up 3.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Controls International vs. Fluor
Performance |
| Timeline |
| Johnson Controls Int |
| Fluor |
Johnson Controls and Fluor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Controls and Fluor
The main advantage of trading using opposite Johnson Controls and Fluor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Controls position performs unexpectedly, Fluor 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 Fluor will offset losses from the drop in Fluor's long position.| Johnson Controls vs. Carpenter Technology | Johnson Controls vs. Myers Industries | Johnson Controls vs. Griffon |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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