Correlation Between Johnson Johnson and MQGAU

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

By analyzing existing cross correlation between Johnson Johnson and MQGAU 134 12 JAN 27, you can compare the effects of market volatilities on Johnson Johnson and MQGAU 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 MQGAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and MQGAU.

Diversification Opportunities for Johnson Johnson and MQGAU

-0.44

Correlation Coefficient

Johnson Johnson  MQGAU

Very good diversification

The 3 months correlation between Johnson and MQGAU is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and MQGAU 134 12 JAN 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MQGAU 134 12 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 MQGAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MQGAU 134 12 has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and MQGAU go up and down completely randomly.

Pair Corralation between Johnson Johnson and MQGAU

Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.58 times more return on investment than MQGAU. However, Johnson Johnson is 1.71 times less risky than MQGAU. It trades about -0.25 of its potential returns per unit of risk. MQGAU 134 12 JAN 27 is currently generating about -0.18 per unit of risk. If you would invest  16,566  in Johnson Johnson on September 14, 2024 and sell it today you would lose (1,902) from holding Johnson Johnson or give up 11.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	42.86%
Values	Daily Returns

Johnson Johnson  vs.  MQGAU 134 12 JAN 27

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 uncertain 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.

MQGAU 134 12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MQGAU 134 12 JAN 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for MQGAU 134 12 JAN 27 investors.

Pair Trading with Johnson Johnson and MQGAU

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

The idea behind Johnson Johnson and MQGAU 134 12 JAN 27 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.