Correlation Between Johnson Controls and Caesarstone

Can any of the company-specific risk be diversified away by investing in both Johnson Controls and Caesarstone 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 Caesarstone 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 Caesarstone, you can compare the effects of market volatilities on Johnson Controls and Caesarstone 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 Caesarstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Controls and Caesarstone.

Diversification Opportunities for Johnson Controls and Caesarstone

-0.08

Correlation Coefficient

Johnson Controls  Caesarstone

Good diversification

The 3 months correlation between Johnson and Caesarstone is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Controls International and Caesarstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesarstone 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 Caesarstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caesarstone has no effect on the direction of Johnson Controls i.e., Johnson Controls and Caesarstone go up and down completely randomly.

Pair Corralation between Johnson Controls and Caesarstone

Considering the 90-day investment horizon Johnson Controls International is expected to generate 0.72 times more return on investment than Caesarstone. However, Johnson Controls International is 1.39 times less risky than Caesarstone. It trades about 0.02 of its potential returns per unit of risk. Caesarstone is currently generating about -0.29 per unit of risk. If you would invest  7,879  in Johnson Controls International on December 30, 2024 and sell it today you would earn a total of  90.00  from holding Johnson Controls International or generate 1.14% return on investment over 90 days.

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

Johnson Controls International  vs.  Caesarstone

Johnson Controls Int

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Controls International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Johnson Controls is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Caesarstone

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caesarstone has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Johnson Controls and Caesarstone

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

The idea behind Johnson Controls International and Caesarstone 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.