Correlation Between JOHNSON SVC and Elis SA
Can any of the company-specific risk be diversified away by investing in both JOHNSON SVC and Elis SA 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 SVC and Elis SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JOHNSON SVC LS 10 and Elis SA, you can compare the effects of market volatilities on JOHNSON SVC and Elis SA 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 SVC with a short position of Elis SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of JOHNSON SVC and Elis SA.
Diversification Opportunities for JOHNSON SVC and Elis SA
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JOHNSON and Elis is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding JOHNSON SVC LS 10 and Elis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elis SA and JOHNSON SVC 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 SVC LS 10 are associated (or correlated) with Elis SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elis SA has no effect on the direction of JOHNSON SVC i.e., JOHNSON SVC and Elis SA go up and down completely randomly.
Pair Corralation between JOHNSON SVC and Elis SA
Assuming the 90 days horizon JOHNSON SVC LS 10 is expected to generate 1.44 times more return on investment than Elis SA. However, JOHNSON SVC is 1.44 times more volatile than Elis SA. It trades about -0.03 of its potential returns per unit of risk. Elis SA is currently generating about -0.06 per unit of risk. If you would invest 191.00 in JOHNSON SVC LS 10 on August 29, 2024 and sell it today you would lose (31.00) from holding JOHNSON SVC LS 10 or give up 16.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JOHNSON SVC LS 10 vs. Elis SA
Performance |
| Timeline |
| JOHNSON SVC LS |
| Elis SA |
JOHNSON SVC and Elis SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JOHNSON SVC and Elis SA
The main advantage of trading using opposite JOHNSON SVC and Elis SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JOHNSON SVC position performs unexpectedly, Elis SA 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 Elis SA will offset losses from the drop in Elis SA's long position.| JOHNSON SVC vs. Cintas | JOHNSON SVC vs. Superior Plus Corp | JOHNSON SVC vs. SIVERS SEMICONDUCTORS AB | JOHNSON SVC vs. Talanx AG |
| Elis SA vs. Cintas | Elis SA vs. Superior Plus Corp | Elis SA vs. SIVERS SEMICONDUCTORS AB | Elis SA vs. Talanx AG |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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