Correlation Between Dow Jones and JOHNSON
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By analyzing existing cross correlation between Dow Jones Industrial and JOHNSON JOHNSON 34, you can compare the effects of market volatilities on Dow Jones and 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 Dow Jones with a short position of JOHNSON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and JOHNSON.
Diversification Opportunities for Dow Jones and JOHNSON
Excellent diversification
The 3 months correlation between Dow and JOHNSON is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and JOHNSON JOHNSON 34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JOHNSON JOHNSON 34 and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with 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 34 has no effect on the direction of Dow Jones i.e., Dow Jones and JOHNSON go up and down completely randomly.
Pair Corralation between Dow Jones and JOHNSON
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.85 times more return on investment than JOHNSON. However, Dow Jones Industrial is 1.18 times less risky than JOHNSON. It trades about 0.1 of its potential returns per unit of risk. JOHNSON JOHNSON 34 is currently generating about 0.0 per unit of risk. If you would invest 3,899,639 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 530,012 from holding Dow Jones Industrial or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.94% |
| Values | Daily Returns |
Dow Jones Industrial vs. JOHNSON JOHNSON 34
Performance |
| Timeline |
Dow Jones and JOHNSON Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
JOHNSON JOHNSON 34
Pair trading matchups for JOHNSON
Pair Trading with Dow Jones and JOHNSON
The main advantage of trading using opposite Dow Jones and JOHNSON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, 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 will offset losses from the drop in JOHNSON's long position.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
| JOHNSON vs. The Coca Cola | JOHNSON vs. JPMorgan Chase Co | JOHNSON vs. Dupont De Nemours | JOHNSON vs. Alcoa Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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