Correlation Between Johnson Johnson and IQ Hedge

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

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

Diversification Opportunities for Johnson Johnson and IQ Hedge

0.0

Correlation Coefficient

Johnson Johnson  IQ Hedge

Pay attention - limited upside

The 3 months correlation between Johnson and QAI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and IQ Hedge Multi Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Hedge Multi 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 IQ Hedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Hedge Multi has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and IQ Hedge go up and down completely randomly.

Pair Corralation between Johnson Johnson and IQ Hedge

Considering the 90-day investment horizon Johnson Johnson is expected to generate 3.09 times more return on investment than IQ Hedge. However, Johnson Johnson is 3.09 times more volatile than IQ Hedge Multi Strategy. It trades about 0.17 of its potential returns per unit of risk. IQ Hedge Multi Strategy is currently generating about 0.0 per unit of risk. If you would invest  14,442  in Johnson Johnson on December 26, 2024 and sell it today you would earn a total of  1,730  from holding Johnson Johnson or generate 11.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Johnson Johnson  vs.  IQ Hedge Multi Strategy

Johnson Johnson

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Johnson Johnson may actually be approaching a critical reversion point that can send shares even higher in April 2025.

IQ Hedge Multi

Risk-Adjusted Performance

Weak

Over the last 90 days IQ Hedge Multi Strategy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IQ Hedge is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Johnson Johnson and IQ Hedge

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

The idea behind Johnson Johnson and IQ Hedge Multi Strategy 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.