Correlation Between Stratasys and JOHNSON

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

By analyzing existing cross correlation between Stratasys and JOHNSON JOHNSON 585, you can compare the effects of market volatilities on Stratasys and 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 Stratasys with a short position of JOHNSON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stratasys and JOHNSON.

Diversification Opportunities for Stratasys and JOHNSON

-0.4

Correlation Coefficient

Stratasys  JOHNSON

Very good diversification

The 3 months correlation between Stratasys and JOHNSON is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Stratasys and JOHNSON JOHNSON 585 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JOHNSON JOHNSON 585 and Stratasys 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 Stratasys are associated (or correlated) with 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 585 has no effect on the direction of Stratasys i.e., Stratasys and JOHNSON go up and down completely randomly.

Pair Corralation between Stratasys and JOHNSON

Given the investment horizon of 90 days Stratasys is expected to under-perform the JOHNSON. In addition to that, Stratasys is 1.04 times more volatile than JOHNSON JOHNSON 585. It trades about -0.13 of its total potential returns per unit of risk. JOHNSON JOHNSON 585 is currently generating about 0.15 per unit of volatility. If you would invest  11,035  in JOHNSON JOHNSON 585 on October 9, 2024 and sell it today you would earn a total of  795.00  from holding JOHNSON JOHNSON 585 or generate 7.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Stratasys  vs.  JOHNSON JOHNSON 585

Stratasys

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stratasys are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Stratasys unveiled solid returns over the last few months and may actually be approaching a breakup point.

JOHNSON JOHNSON 585

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JOHNSON JOHNSON 585 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, JOHNSON may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Stratasys and JOHNSON

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

The idea behind Stratasys and JOHNSON JOHNSON 585 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.