Correlation Between Johnson Johnson and 983133AA7

Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and 983133AA7 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 983133AA7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Johnson Johnson and WYNN RESORTS FIN, you can compare the effects of market volatilities on Johnson Johnson and 983133AA7 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 983133AA7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and 983133AA7.

Diversification Opportunities for Johnson Johnson and 983133AA7

0.58

Correlation Coefficient

Johnson Johnson  983133AA7

Very weak diversification

The 3 months correlation between Johnson and 983133AA7 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and WYNN RESORTS FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WYNN RESORTS FIN 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 983133AA7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WYNN RESORTS FIN has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and 983133AA7 go up and down completely randomly.

Pair Corralation between Johnson Johnson and 983133AA7

Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the 983133AA7. In addition to that, Johnson Johnson is 3.27 times more volatile than WYNN RESORTS FIN. It trades about -0.19 of its total potential returns per unit of risk. WYNN RESORTS FIN is currently generating about -0.09 per unit of volatility. If you would invest  9,710  in WYNN RESORTS FIN on October 23, 2024 and sell it today you would lose (142.00) from holding WYNN RESORTS FIN or give up 1.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.67%
Values	Daily Returns

Johnson Johnson  vs.  WYNN RESORTS FIN

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.

WYNN RESORTS FIN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WYNN RESORTS FIN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 983133AA7 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Johnson Johnson and 983133AA7

The main advantage of trading using opposite Johnson Johnson and 983133AA7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, 983133AA7 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 983133AA7 will offset losses from the drop in 983133AA7's long position.

The idea behind Johnson Johnson and WYNN RESORTS FIN 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.