Correlation Between IQ Hedge and Johnson Johnson

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

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

Diversification Opportunities for IQ Hedge and Johnson Johnson

0.0

Correlation Coefficient

IQ Hedge  Johnson Johnson

Pay attention - limited upside

The 3 months correlation between QAI and Johnson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IQ Hedge Multi Strategy and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and IQ Hedge 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 IQ Hedge Multi Strategy 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 IQ Hedge i.e., IQ Hedge and Johnson Johnson go up and down completely randomly.

Pair Corralation between IQ Hedge and Johnson Johnson

Considering the 90-day investment horizon IQ Hedge is expected to generate 960.0 times less return on investment than Johnson Johnson. But when comparing it to its historical volatility, IQ Hedge Multi Strategy is 3.09 times less risky than Johnson Johnson. It trades about 0.0 of its potential returns per unit of risk. Johnson Johnson is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  14,442  in Johnson Johnson on December 26, 2024 and sell it today you would earn a total of  1,730  from holding Johnson Johnson or generate 11.98% return on investment over 90 days.

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

IQ Hedge Multi Strategy  vs.  Johnson Johnson

IQ Hedge Multi

Risk-Adjusted Performance

Weak

Over the last 90 days IQ Hedge Multi Strategy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IQ Hedge is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Johnson Johnson

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 13 (%) 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 IQ Hedge and Johnson Johnson

The main advantage of trading using opposite IQ Hedge and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ Hedge 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 IQ Hedge Multi Strategy 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.