Correlation Between Johnson Johnson and Investin Optimal

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

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

Diversification Opportunities for Johnson Johnson and Investin Optimal

-0.65

Correlation Coefficient

Johnson Johnson  Investin Optimal

Excellent diversification

The 3 months correlation between Johnson and Investin is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Investin Optimal VerdensIndex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investin Optimal Ver and Johnson 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 Johnson Johnson are associated (or correlated) with Investin Optimal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investin Optimal Ver has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Investin Optimal go up and down completely randomly.

Pair Corralation between Johnson Johnson and Investin Optimal

Assuming the 90 days trading horizon Johnson Johnson is expected to generate 3.36 times more return on investment than Investin Optimal. However, Johnson Johnson is 3.36 times more volatile than Investin Optimal VerdensIndex. It trades about -0.06 of its potential returns per unit of risk. Investin Optimal VerdensIndex is currently generating about -0.26 per unit of risk. If you would invest  259,300  in Johnson Johnson on January 24, 2024 and sell it today you would lose (3,500) from holding Johnson Johnson or give up 1.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Johnson Johnson  vs.  Investin Optimal VerdensIndex

Johnson Johnson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Johnson has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Investin Optimal Ver

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investin Optimal VerdensIndex are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Investin Optimal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Johnson Johnson and Investin Optimal

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

The idea behind Johnson Johnson and Investin Optimal VerdensIndex 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.