Correlation Between Johnson Johnson and 02379DAA8

Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and 02379DAA8 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 02379DAA8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Johnson Johnson and AAL 385 15 FEB 28, you can compare the effects of market volatilities on Johnson Johnson and 02379DAA8 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 02379DAA8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and 02379DAA8.

Diversification Opportunities for Johnson Johnson and 02379DAA8

-0.46

Correlation Coefficient

Johnson Johnson  02379DAA8

Very good diversification

The 3 months correlation between Johnson and 02379DAA8 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and AAL 385 15 FEB 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAL 385 15 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 02379DAA8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAL 385 15 has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and 02379DAA8 go up and down completely randomly.

Pair Corralation between Johnson Johnson and 02379DAA8

Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the 02379DAA8. In addition to that, Johnson Johnson is 1.79 times more volatile than AAL 385 15 FEB 28. It trades about -0.09 of its total potential returns per unit of risk. AAL 385 15 FEB 28 is currently generating about 0.26 per unit of volatility. If you would invest  9,350  in AAL 385 15 FEB 28 on September 4, 2024 and sell it today you would earn a total of  41.00  from holding AAL 385 15 FEB 28 or generate 0.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	19.05%
Values	Daily Returns

Johnson Johnson  vs.  AAL 385 15 FEB 28

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.

AAL 385 15

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days AAL 385 15 FEB 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat fragile basic indicators, 02379DAA8 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Johnson Johnson and 02379DAA8

The main advantage of trading using opposite Johnson Johnson and 02379DAA8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, 02379DAA8 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 02379DAA8 will offset losses from the drop in 02379DAA8's long position.

The idea behind Johnson Johnson and AAL 385 15 FEB 28 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.