Correlation Between Johnson Johnson and CEL SCI

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

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

Diversification Opportunities for Johnson Johnson and CEL SCI

0.85

Correlation Coefficient

Johnson Johnson  CEL SCI

Very poor diversification

The 3 months correlation between Johnson and CEL is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and CEL SCI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEL SCI Corp 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 CEL SCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEL SCI Corp has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and CEL SCI go up and down completely randomly.

Pair Corralation between Johnson Johnson and CEL SCI

Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the CEL SCI. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 11.57 times less risky than CEL SCI. The stock trades about -0.35 of its potential returns per unit of risk. The CEL SCI Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  56.00  in CEL SCI Corp on September 17, 2024 and sell it today you would earn a total of  10.99  from holding CEL SCI Corp or generate 19.63% return on investment over 90 days.

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

Johnson Johnson  vs.  CEL SCI Corp

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. Even with latest uncertain performance, the Stock's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

CEL SCI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEL SCI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Johnson Johnson and CEL SCI

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

The idea behind Johnson Johnson and CEL SCI Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.