Correlation Between Johnson Johnson and Singular Genomics

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

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

Diversification Opportunities for Johnson Johnson and Singular Genomics

0.86

Correlation Coefficient

Johnson Johnson  Singular Genomics

Very poor diversification

The 3 months correlation between Johnson and Singular is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Singular Genomics Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singular Genomics Systems and Johnson Johnson 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 Johnson are associated (or correlated) with Singular Genomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singular Genomics Systems has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Singular Genomics go up and down completely randomly.

Pair Corralation between Johnson Johnson and Singular Genomics

Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.25 times more return on investment than Singular Genomics. However, Johnson Johnson is 4.06 times less risky than Singular Genomics. It trades about -0.09 of its potential returns per unit of risk. Singular Genomics Systems is currently generating about -0.12 per unit of risk. If you would invest  14,997  in Johnson Johnson on March 2, 2024 and sell it today you would lose (330.00) from holding Johnson Johnson or give up 2.2% of portfolio value over 90 days.

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

Johnson Johnson  vs.  Singular Genomics Systems

Johnson Johnson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Johnson has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Singular Genomics Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Singular Genomics Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Johnson Johnson and Singular Genomics

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

The idea behind Johnson Johnson and Singular Genomics Systems 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.