Correlation Between Johnson Controls and SPORTING

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

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

Diversification Opportunities for Johnson Controls and SPORTING

-0.07

Correlation Coefficient

Johnson Controls  SPORTING

Good diversification

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

Pair Corralation between Johnson Controls and SPORTING

Assuming the 90 days trading horizon Johnson Controls International is expected to generate 0.82 times more return on investment than SPORTING. However, Johnson Controls International is 1.22 times less risky than SPORTING. It trades about 0.04 of its potential returns per unit of risk. SPORTING is currently generating about 0.01 per unit of risk. If you would invest  5,943  in Johnson Controls International on October 4, 2024 and sell it today you would earn a total of  1,633  from holding Johnson Controls International or generate 27.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Johnson Controls International  vs.  SPORTING

Johnson Controls Int

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Controls International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Johnson Controls may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SPORTING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPORTING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Johnson Controls and SPORTING

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

The idea behind Johnson Controls International and SPORTING 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.