Correlation Between Johnson Johnson and Kaman

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

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

Diversification Opportunities for Johnson Johnson and Kaman

-0.74

Correlation Coefficient

Johnson Johnson  Kaman

Pay attention - limited upside

The 3 months correlation between Johnson and Kaman is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Kaman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaman 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 Kaman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaman has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Kaman go up and down completely randomly.

Pair Corralation between Johnson Johnson and Kaman

If you would invest  15,030  in Johnson Johnson on September 4, 2024 and sell it today you would earn a total of  206.00  from holding Johnson Johnson or generate 1.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	0.4%
Values	Daily Returns

Johnson Johnson  vs.  Kaman

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.

Kaman

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Johnson Johnson and Kaman

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

The idea behind Johnson Johnson and Kaman 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.