Correlation Between Johnson Johnson and Integrated Ventures

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

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

Diversification Opportunities for Johnson Johnson and Integrated Ventures

-0.54

Correlation Coefficient

Johnson Johnson  Integrated Ventures

Excellent diversification

The 3 months correlation between Johnson and Integrated is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Integrated Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Ventures 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 Integrated Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Ventures has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Integrated Ventures go up and down completely randomly.

Pair Corralation between Johnson Johnson and Integrated Ventures

Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.13 times more return on investment than Integrated Ventures. However, Johnson Johnson is 7.96 times less risky than Integrated Ventures. It trades about 0.15 of its potential returns per unit of risk. Integrated Ventures is currently generating about -0.24 per unit of risk. If you would invest  14,928  in Johnson Johnson on December 4, 2024 and sell it today you would earn a total of  1,574  from holding Johnson Johnson or generate 10.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Johnson Johnson  vs.  Integrated Ventures

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.

Integrated Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Integrated Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Johnson Johnson and Integrated Ventures

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

The idea behind Johnson Johnson and Integrated Ventures 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.