Correlation Between Johnson Johnson and 902613AX6

Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and 902613AX6 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 902613AX6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Johnson Johnson and UBS Group 375, you can compare the effects of market volatilities on Johnson Johnson and 902613AX6 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 902613AX6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and 902613AX6.

Diversification Opportunities for Johnson Johnson and 902613AX6

-0.36

Correlation Coefficient

Johnson Johnson  902613AX6

Very good diversification

The 3 months correlation between Johnson and 902613AX6 is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and UBS Group 375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group 375 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 902613AX6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group 375 has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and 902613AX6 go up and down completely randomly.

Pair Corralation between Johnson Johnson and 902613AX6

Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the 902613AX6. In addition to that, Johnson Johnson is 3.36 times more volatile than UBS Group 375. It trades about -0.19 of its total potential returns per unit of risk. UBS Group 375 is currently generating about 0.03 per unit of volatility. If you would invest  9,935  in UBS Group 375 on September 12, 2024 and sell it today you would earn a total of  37.00  from holding UBS Group 375 or generate 0.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Johnson Johnson  vs.  UBS Group 375

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.

UBS Group 375

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Group 375 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 902613AX6 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 902613AX6

The main advantage of trading using opposite Johnson Johnson and 902613AX6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, 902613AX6 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 902613AX6 will offset losses from the drop in 902613AX6's long position.

The idea behind Johnson Johnson and UBS Group 375 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.