Correlation Between Johnson Johnson and Nuveen Preferred

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

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

Diversification Opportunities for Johnson Johnson and Nuveen Preferred

-0.39

Correlation Coefficient

Johnson Johnson  Nuveen Preferred

Very good diversification

The 3 months correlation between Johnson and Nuveen is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Nuveen Preferred and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Preferred 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 Nuveen Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Preferred has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Nuveen Preferred go up and down completely randomly.

Pair Corralation between Johnson Johnson and Nuveen Preferred

Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Nuveen Preferred. In addition to that, Johnson Johnson is 1.08 times more volatile than Nuveen Preferred and. It trades about -0.19 of its total potential returns per unit of risk. Nuveen Preferred and is currently generating about 0.18 per unit of volatility. If you would invest  1,922  in Nuveen Preferred and on September 12, 2024 and sell it today you would earn a total of  158.00  from holding Nuveen Preferred and or generate 8.22% 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.  Nuveen Preferred and

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 weak 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.

Nuveen Preferred

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Preferred and are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Nuveen Preferred may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Johnson Johnson and Nuveen Preferred

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

The idea behind Johnson Johnson and Nuveen Preferred and 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.