Correlation Between Bayer AG and Johnson Johnson
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By analyzing existing cross correlation between Bayer AG NA and Johnson Johnson, you can compare the effects of market volatilities on Bayer AG and Johnson Johnson 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 Bayer AG with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayer AG and Johnson Johnson.
Diversification Opportunities for Bayer AG and Johnson Johnson
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bayer and Johnson is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bayer AG NA and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Bayer AG 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 Bayer AG NA are associated (or correlated) with Johnson Johnson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Johnson has no effect on the direction of Bayer AG i.e., Bayer AG and Johnson Johnson go up and down completely randomly.
Pair Corralation between Bayer AG and Johnson Johnson
Assuming the 90 days trading horizon Bayer AG NA is expected to under-perform the Johnson Johnson. In addition to that, Bayer AG is 3.54 times more volatile than Johnson Johnson. It trades about -0.33 of its total potential returns per unit of risk. Johnson Johnson is currently generating about -0.04 per unit of volatility. If you would invest 14,970 in Johnson Johnson on August 26, 2024 and sell it today you would lose (134.00) from holding Johnson Johnson or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayer AG NA vs. Johnson Johnson
Performance |
| Timeline |
| Bayer AG NA |
| Johnson Johnson |
Bayer AG and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayer AG and Johnson Johnson
The main advantage of trading using opposite Bayer AG and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayer AG position performs unexpectedly, Johnson Johnson 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 Johnson will offset losses from the drop in Johnson Johnson's long position.| Bayer AG vs. Align Technology | Bayer AG vs. Nok Airlines PCL | Bayer AG vs. PKSHA TECHNOLOGY INC | Bayer AG vs. International Consolidated Airlines |
| Johnson Johnson vs. Pfizer Inc | Johnson Johnson vs. Amgen Inc | Johnson Johnson vs. Bayer AG NA | Johnson Johnson vs. Biogen Inc |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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