Correlation Between Dana and Johnson Controls
Can any of the company-specific risk be diversified away by investing in both Dana and Johnson Controls 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 Dana and Johnson Controls into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Inc and Johnson Controls International, you can compare the effects of market volatilities on Dana and Johnson Controls 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 Dana with a short position of Johnson Controls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and Johnson Controls.
Diversification Opportunities for Dana and Johnson Controls
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dana and Johnson is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and Johnson Controls International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Controls Int and Dana 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 Dana Inc are associated (or correlated) with Johnson Controls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Controls Int has no effect on the direction of Dana i.e., Dana and Johnson Controls go up and down completely randomly.
Pair Corralation between Dana and Johnson Controls
Considering the 90-day investment horizon Dana Inc is expected to under-perform the Johnson Controls. In addition to that, Dana is 1.42 times more volatile than Johnson Controls International. It trades about -0.02 of its total potential returns per unit of risk. Johnson Controls International is currently generating about 0.02 per unit of volatility. If you would invest 6,115 in Johnson Controls International on January 24, 2024 and sell it today you would earn a total of 402.00 from holding Johnson Controls International or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Inc vs. Johnson Controls International
Performance |
| Timeline |
| Dana Inc |
| Johnson Controls Int |
Dana and Johnson Controls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana and Johnson Controls
The main advantage of trading using opposite Dana and Johnson Controls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana position performs unexpectedly, Johnson Controls 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 Controls will offset losses from the drop in Johnson Controls' long position.The idea behind Dana Inc and Johnson Controls International 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.| Johnson Controls vs. Janus International Group | Johnson Controls vs. Interface | Johnson Controls vs. Beacon Roofing Supply | Johnson Controls vs. Perma Pipe International Holdings |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |