Correlation Between Johnson Johnson and Cano Health

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

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

Diversification Opportunities for Johnson Johnson and Cano Health

0.0

Correlation Coefficient

Johnson Johnson  Cano Health

Pay attention - limited upside

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

Pair Corralation between Johnson Johnson and Cano Health

If you would invest  15,378  in Johnson Johnson on November 29, 2024 and sell it today you would earn a total of  1,231  from holding Johnson Johnson or generate 8.0% return on investment over 90 days.

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

Johnson Johnson  vs.  Cano Health

Johnson Johnson

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Johnson Johnson may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Cano Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cano Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cano Health is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Johnson Johnson and Cano Health

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

The idea behind Johnson Johnson and Cano Health 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.