Correlation Between Johnson Johnson and ALTICE

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

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

Diversification Opportunities for Johnson Johnson and ALTICE

-0.65

Correlation Coefficient

Johnson Johnson  ALTICE

Excellent diversification

The 3 months correlation between Johnson and ALTICE is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and ALTICE FRANCE S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTICE FRANCE S 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 ALTICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTICE FRANCE S has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and ALTICE go up and down completely randomly.

Pair Corralation between Johnson Johnson and ALTICE

Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.41 times more return on investment than ALTICE. However, Johnson Johnson is 2.43 times less risky than ALTICE. It trades about 0.07 of its potential returns per unit of risk. ALTICE FRANCE S is currently generating about 0.03 per unit of risk. If you would invest  14,372  in Johnson Johnson on September 3, 2024 and sell it today you would earn a total of  1,129  from holding Johnson Johnson or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	63.2%
Values	Daily Returns

Johnson Johnson  vs.  ALTICE FRANCE S

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 conflicting 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.

ALTICE FRANCE S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALTICE FRANCE S has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALTICE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Johnson Johnson and ALTICE

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

The idea behind Johnson Johnson and ALTICE FRANCE S 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.