Correlation Between Victory Integrity and Johnson Johnson

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

By analyzing existing cross correlation between Victory Integrity Smallmid Cap and Johnson Johnson, you can compare the effects of market volatilities on Victory Integrity and Johnson Johnson 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 Victory Integrity with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Integrity and Johnson Johnson.

Diversification Opportunities for Victory Integrity and Johnson Johnson

0.07

Correlation Coefficient

Victory Integrity  Johnson Johnson

Significant diversification

The 3 months correlation between Victory and Johnson is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Victory Integrity Smallmid Cap and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Victory Integrity 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 Victory Integrity Smallmid Cap are associated (or correlated) with Johnson Johnson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Johnson has no effect on the direction of Victory Integrity i.e., Victory Integrity and Johnson Johnson go up and down completely randomly.

Pair Corralation between Victory Integrity and Johnson Johnson

Assuming the 90 days horizon Victory Integrity Smallmid Cap is expected to under-perform the Johnson Johnson. In addition to that, Victory Integrity is 1.26 times more volatile than Johnson Johnson. It trades about -0.19 of its total potential returns per unit of risk. Johnson Johnson is currently generating about 0.11 per unit of volatility. If you would invest  15,357  in Johnson Johnson on December 2, 2024 and sell it today you would earn a total of  1,145  from holding Johnson Johnson or generate 7.46% return on investment over 90 days.

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

Victory Integrity Smallmid Cap  vs.  Johnson Johnson

Victory Integrity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Integrity Smallmid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Johnson Johnson

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 8 (%) 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.

Pair Trading with Victory Integrity and Johnson Johnson

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

The idea behind Victory Integrity Smallmid Cap and Johnson Johnson 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.