Correlation Between Johnson Johnson and EMagin

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

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

Diversification Opportunities for Johnson Johnson and EMagin

-0.35

Correlation Coefficient

Johnson Johnson  EMagin

Very good diversification

The 3 months correlation between Johnson and EMagin is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and EMagin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMagin 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 EMagin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMagin has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and EMagin go up and down completely randomly.

Pair Corralation between Johnson Johnson and EMagin

If you would invest  200.00  in EMagin on September 13, 2024 and sell it today you would earn a total of  0.00  from holding EMagin or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Johnson Johnson  vs.  EMagin

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.

EMagin

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Johnson Johnson and EMagin

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

The idea behind Johnson Johnson and EMagin 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.