Correlation Between Mead Johnson and IShares Short

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Can any of the company-specific risk be diversified away by investing in both Mead Johnson and IShares Short 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 Mead Johnson and IShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mead Johnson Nutrition and IShares Short Maturity, you can compare the effects of market volatilities on Mead Johnson and IShares Short 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 Mead Johnson with a short position of IShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mead Johnson and IShares Short.

Diversification Opportunities for Mead Johnson and IShares Short

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Mead and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mead Johnson Nutrition and IShares Short Maturity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares Short Maturity and Mead Johnson 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 Mead Johnson Nutrition are associated (or correlated) with IShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares Short Maturity has no effect on the direction of Mead Johnson i.e., Mead Johnson and IShares Short go up and down completely randomly.

Pair Corralation between Mead Johnson and IShares Short

If you would invest  4,726  in IShares Short Maturity on December 29, 2023 and sell it today you would earn a total of  317.23  from holding IShares Short Maturity or generate 6.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Mead Johnson Nutrition  vs.  IShares Short Maturity

 Performance 
       Timeline  
Mead Johnson Nutrition 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Mead Johnson Nutrition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking indicators, Mead Johnson is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
IShares Short Maturity 

Risk-Adjusted Performance

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OK
Compared to the overall equity markets, risk-adjusted returns on investments in IShares Short Maturity are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Short is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Mead Johnson and IShares Short Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mead Johnson and IShares Short

The main advantage of trading using opposite Mead Johnson and IShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mead Johnson position performs unexpectedly, IShares Short 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 IShares Short will offset losses from the drop in IShares Short's long position.
The idea behind Mead Johnson Nutrition and IShares Short Maturity 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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