Correlation Between Johnson Johnson and ATT

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

Diversification Opportunities for Johnson Johnson and ATT

0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Johnson and ATT is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and ATT go up and down completely randomly.

Pair Corralation between Johnson Johnson and ATT

Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.69 times more return on investment than ATT. However, Johnson Johnson is 1.45 times less risky than ATT. It trades about 0.03 of its potential returns per unit of risk. ATT Inc is currently generating about -0.03 per unit of risk. If you would invest  18,109  in Johnson Johnson on March 28, 2022 and sell it today you would earn a total of  120.00  from holding Johnson Johnson or generate 0.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Johnson Johnson  vs.  ATT Inc

 Performance (%) 
      Timeline 
Johnson Johnson 
Johnson Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Johnson Johnson is not utilizing all of its potentials. The latest 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

ATT Inc 
ATT Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0556
Payout Ratio
0.56
Last Split Factor
1324:1000
Forward Annual Dividend Rate
1.11
Dividend Date
2022-05-02
Ex Dividend Date
2022-04-13
Last Split Date
2022-04-11

ATT Price Channel

Johnson Johnson and ATT Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Johnson Johnson and ATT

The main advantage of trading using opposite Johnson Johnson and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.
The idea behind Johnson Johnson and ATT Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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