Correlation Between Johnson Johnson and Elanco Animal
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Elanco Animal 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 Elanco Animal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Elanco Animal Health, you can compare the effects of market volatilities on Johnson Johnson and Elanco Animal 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 Elanco Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Elanco Animal.
Diversification Opportunities for Johnson Johnson and Elanco Animal
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Johnson and Elanco is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Elanco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elanco Animal Health 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 Elanco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elanco Animal Health has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Elanco Animal go up and down completely randomly.
Pair Corralation between Johnson Johnson and Elanco Animal
If you would invest 0.00 in Elanco Animal Health on March 1, 2024 and sell it today you would earn a total of 0.00 from holding Elanco Animal Health or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 2.33% |
Values | Daily Returns |
Johnson Johnson vs. Elanco Animal Health
Performance |
Timeline |
Johnson Johnson |
Elanco Animal Health |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Johnson Johnson and Elanco Animal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Johnson Johnson and Elanco Animal
The main advantage of trading using opposite Johnson Johnson and Elanco Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Elanco Animal 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 Elanco Animal will offset losses from the drop in Elanco Animal's long position.Johnson Johnson vs. Universe Pharmaceuticals | Johnson Johnson vs. Akanda Corp | Johnson Johnson vs. Petros Pharmaceuticals | Johnson Johnson vs. Sunshine Biopharma |
Elanco Animal vs. Viatris | Elanco Animal vs. Lantheus Holdings | Elanco Animal vs. Haleon plc | Elanco Animal vs. Prestige Brand 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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