Correlation Between Ligand Pharms and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both Ligand Pharms 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 Ligand Pharms and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ligand Pharms Glucagon and Johnson Johnson, you can compare the effects of market volatilities on Ligand Pharms 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 Ligand Pharms with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligand Pharms and Johnson Johnson.
Diversification Opportunities for Ligand Pharms and Johnson Johnson
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ligand and Johnson is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ligand Pharms Glucagon and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Ligand Pharms 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 Ligand Pharms Glucagon 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 Ligand Pharms i.e., Ligand Pharms and Johnson Johnson go up and down completely randomly.
Pair Corralation between Ligand Pharms and Johnson Johnson
Assuming the 90 days horizon Ligand Pharms Glucagon is expected to generate 136.87 times more return on investment than Johnson Johnson. However, Ligand Pharms is 136.87 times more volatile than Johnson Johnson. It trades about 0.19 of its potential returns per unit of risk. Johnson Johnson is currently generating about -0.04 per unit of risk. If you would invest 0.37 in Ligand Pharms Glucagon on January 18, 2024 and sell it today you would lose (0.22) from holding Ligand Pharms Glucagon or give up 59.46% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 16.94% |
Values | Daily Returns |
Ligand Pharms Glucagon vs. Johnson Johnson
Performance |
Timeline |
Ligand Pharms Glucagon |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Johnson Johnson |
Ligand Pharms and Johnson Johnson Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ligand Pharms and Johnson Johnson
The main advantage of trading using opposite Ligand Pharms and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligand Pharms 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.Ligand Pharms vs. Marathon Group Corp | Ligand Pharms vs. Halitron | Ligand Pharms vs. Icon Media Holdings | Ligand Pharms vs. Protext Mobility |
Johnson Johnson vs. PetIQ Inc | Johnson Johnson vs. Emergent Biosolutions | Johnson Johnson vs. Neurocrine Biosciences | Johnson Johnson vs. Haleon plc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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