Correlation Between Johnson Johnson and Autopistas Del

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

By analyzing existing cross correlation between Johnson Johnson Co and Autopistas del Sol, you can compare the effects of market volatilities on Johnson Johnson and Autopistas Del 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 Autopistas Del. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Autopistas Del.

Diversification Opportunities for Johnson Johnson and Autopistas Del

-0.38

Correlation Coefficient

Johnson Johnson  Autopistas Del

Very good diversification

The 3 months correlation between Johnson and Autopistas is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson Co and Autopistas del Sol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autopistas del Sol 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 Co are associated (or correlated) with Autopistas Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autopistas del Sol has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Autopistas Del go up and down completely randomly.

Pair Corralation between Johnson Johnson and Autopistas Del

Assuming the 90 days trading horizon Johnson Johnson is expected to generate 2.18 times less return on investment than Autopistas Del. But when comparing it to its historical volatility, Johnson Johnson Co is 1.42 times less risky than Autopistas Del. It trades about 0.1 of its potential returns per unit of risk. Autopistas del Sol is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  40,700  in Autopistas del Sol on October 7, 2024 and sell it today you would earn a total of  342,800  from holding Autopistas del Sol or generate 842.26% return on investment over 90 days.

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

Johnson Johnson Co  vs.  Autopistas del Sol

Johnson Johnson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Johnson Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Autopistas del Sol

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Autopistas del Sol are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Autopistas Del sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Johnson Johnson and Autopistas Del

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

The idea behind Johnson Johnson Co and Autopistas del Sol 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.