Correlation Between Scottish Mortgage and Johnson Johnson

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

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

Diversification Opportunities for Scottish Mortgage and Johnson Johnson

0.0

Correlation Coefficient

Scottish Mortgage  Johnson Johnson

Pay attention - limited upside

The 3 months correlation between Scottish and Johnson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Scottish Mortgage Investment and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Scottish Mortgage 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 Scottish Mortgage Investment are associated (or correlated) with Johnson Johnson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Johnson has no effect on the direction of Scottish Mortgage i.e., Scottish Mortgage and Johnson Johnson go up and down completely randomly.

Pair Corralation between Scottish Mortgage and Johnson Johnson

If you would invest  886.00  in Scottish Mortgage Investment on October 24, 2024 and sell it today you would earn a total of  353.00  from holding Scottish Mortgage Investment or generate 39.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Scottish Mortgage Investment  vs.  Johnson Johnson

Scottish Mortgage

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Scottish Mortgage reported solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of very healthy forward-looking indicators, Johnson Johnson is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Scottish Mortgage and Johnson Johnson

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

The idea behind Scottish Mortgage Investment and Johnson Johnson 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.