Correlation Between Johnson Johnson and Goodness Growth

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

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

Diversification Opportunities for Johnson Johnson and Goodness Growth

-0.22

Correlation Coefficient

Johnson Johnson  Goodness Growth

Very good diversification

The 3 months correlation between Johnson and Goodness is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Goodness Growth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodness Growth Holdings 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 Goodness Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodness Growth Holdings has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Goodness Growth go up and down completely randomly.

Pair Corralation between Johnson Johnson and Goodness Growth

Considering the 90-day investment horizon Johnson Johnson is expected to generate 5.65 times less return on investment than Goodness Growth. But when comparing it to its historical volatility, Johnson Johnson is 12.25 times less risky than Goodness Growth. It trades about 0.15 of its potential returns per unit of risk. Goodness Growth Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Goodness Growth Holdings on December 4, 2024 and sell it today you would earn a total of  7.00  from holding Goodness Growth Holdings or generate 20.0% 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.  Goodness Growth Holdings

Johnson Johnson

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Johnson Johnson may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Goodness Growth Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goodness Growth Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Goodness Growth reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Johnson Johnson and Goodness Growth

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

The idea behind Johnson Johnson and Goodness Growth Holdings 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.