Correlation Between Sports Gear and Johnson Health
Can any of the company-specific risk be diversified away by investing in both Sports Gear and Johnson Health 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 Sports Gear and Johnson Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sports Gear Co and Johnson Health Tech, you can compare the effects of market volatilities on Sports Gear and Johnson Health 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 Sports Gear with a short position of Johnson Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sports Gear and Johnson Health.
Diversification Opportunities for Sports Gear and Johnson Health
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sports and Johnson is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sports Gear Co and Johnson Health Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Health Tech and Sports Gear 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 Sports Gear Co are associated (or correlated) with Johnson Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Health Tech has no effect on the direction of Sports Gear i.e., Sports Gear and Johnson Health go up and down completely randomly.
Pair Corralation between Sports Gear and Johnson Health
Assuming the 90 days trading horizon Sports Gear Co is expected to generate 0.82 times more return on investment than Johnson Health. However, Sports Gear Co is 1.23 times less risky than Johnson Health. It trades about 0.16 of its potential returns per unit of risk. Johnson Health Tech is currently generating about 0.13 per unit of risk. If you would invest 6,429 in Sports Gear Co on August 25, 2024 and sell it today you would earn a total of 8,321 from holding Sports Gear Co or generate 129.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sports Gear Co vs. Johnson Health Tech
Performance |
| Timeline |
| Sports Gear |
| Johnson Health Tech |
Sports Gear and Johnson Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sports Gear and Johnson Health
The main advantage of trading using opposite Sports Gear and Johnson Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sports Gear position performs unexpectedly, Johnson Health 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 Health will offset losses from the drop in Johnson Health's long position.| Sports Gear vs. Giant Manufacturing Co | Sports Gear vs. Johnson Health Tech | Sports Gear vs. Power Wind Health |
| Johnson Health vs. Taiwan Semiconductor Manufacturing | Johnson Health vs. Hon Hai Precision | Johnson Health vs. MediaTek | Johnson Health vs. Chunghwa Telecom Co |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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