Correlation Between Johnson Johnson and Conestoga Smid
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Conestoga Smid 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 Conestoga Smid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Conestoga Smid Cap, you can compare the effects of market volatilities on Johnson Johnson and Conestoga Smid 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 Conestoga Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Conestoga Smid.
Diversification Opportunities for Johnson Johnson and Conestoga Smid
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Johnson and Conestoga is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Conestoga Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conestoga Smid Cap 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 Conestoga Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conestoga Smid Cap has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Conestoga Smid go up and down completely randomly.
Pair Corralation between Johnson Johnson and Conestoga Smid
Considering the 90-day investment horizon Johnson Johnson is expected to generate 1.29 times more return on investment than Conestoga Smid. However, Johnson Johnson is 1.29 times more volatile than Conestoga Smid Cap. It trades about 0.11 of its potential returns per unit of risk. Conestoga Smid Cap is currently generating about -0.16 per unit of risk. If you would invest 15,357 in Johnson Johnson on December 2, 2024 and sell it today you would earn a total of 1,145 from holding Johnson Johnson or generate 7.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Johnson Johnson vs. Conestoga Smid Cap
Performance |
Timeline |
Johnson Johnson |
Conestoga Smid Cap |
Johnson Johnson and Conestoga Smid Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Johnson Johnson and Conestoga Smid
The main advantage of trading using opposite Johnson Johnson and Conestoga Smid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Conestoga Smid 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 Conestoga Smid will offset losses from the drop in Conestoga Smid's long position.Johnson Johnson vs. Merck Company | Johnson Johnson vs. Bristol Myers Squibb | Johnson Johnson vs. Amgen Inc | Johnson Johnson vs. Pfizer Inc |
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Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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