Correlation Between Fedex Corp and Johnson Johnson

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

Diversification Opportunities for Fedex Corp and Johnson Johnson

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between Fedex and Johnson is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fedex Corp and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Fedex Corp 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 Fedex Corp 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 Fedex Corp i.e., Fedex Corp and Johnson Johnson go up and down completely randomly.

Pair Corralation between Fedex Corp and Johnson Johnson

Considering the 90-day investment horizon Fedex Corp is expected to generate 3.11 times more return on investment than Johnson Johnson. However, Fedex Corp is 3.11 times more volatile than Johnson Johnson. It trades about 0.07 of its potential returns per unit of risk. Johnson Johnson is currently generating about -0.05 per unit of risk. If you would invest  22,345  in Fedex Corp on March 31, 2022 and sell it today you would earn a total of  1,036  from holding Fedex Corp or generate 4.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fedex Corp  vs.  Johnson Johnson

 Performance (%) 
      Timeline 
Fedex Corp 
Fedex Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Fedex Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Fedex Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0191
Payout Ratio
0.13
Last Split Factor
2:1
Forward Annual Dividend Rate
4.6
Dividend Date
2022-07-11
Ex Dividend Date
2022-06-24
Last Split Date
1999-05-07

Fedex Price Channel

Johnson Johnson 
Johnson Performance
0 of 100
Over the last 90 days Johnson Johnson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Johnson Johnson is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0252
Payout Ratio
0.44
Last Split Factor
2:1
Forward Annual Dividend Rate
4.52
Dividend Date
2022-06-07
Ex Dividend Date
2022-05-23
Last Split Date
2001-06-13

Johnson Price Channel

Fedex Corp and Johnson Johnson Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Fedex Corp and Johnson Johnson

The main advantage of trading using opposite Fedex Corp and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fedex Corp 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.
The idea behind Fedex Corp and Johnson Johnson 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.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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