Correlation Between Johnson Johnson and SPDR SSGA

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

By analyzing existing cross correlation between Johnson Johnson and SPDR SSGA My2026, you can compare the effects of market volatilities on Johnson Johnson and SPDR SSGA 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 SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and SPDR SSGA.

Diversification Opportunities for Johnson Johnson and SPDR SSGA

0.95

Correlation Coefficient

Johnson Johnson  SPDR SSGA

Almost no diversification

The 3 months correlation between Johnson and SPDR is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and SPDR SSGA My2026 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA My2026 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 SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA My2026 has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and SPDR SSGA go up and down completely randomly.

Pair Corralation between Johnson Johnson and SPDR SSGA

Considering the 90-day investment horizon Johnson Johnson is expected to generate 17.76 times more return on investment than SPDR SSGA. However, Johnson Johnson is 17.76 times more volatile than SPDR SSGA My2026. It trades about 0.2 of its potential returns per unit of risk. SPDR SSGA My2026 is currently generating about 0.36 per unit of risk. If you would invest  14,332  in Johnson Johnson on December 20, 2024 and sell it today you would earn a total of  1,967  from holding Johnson Johnson or generate 13.72% return on investment over 90 days.

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

Johnson Johnson  vs.  SPDR SSGA My2026

Johnson Johnson

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Johnson Johnson revealed solid returns over the last few months and may actually be approaching a breakup point.

SPDR SSGA My2026

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSGA My2026 are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, SPDR SSGA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Johnson Johnson and SPDR SSGA

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

The idea behind Johnson Johnson and SPDR SSGA My2026 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.