Correlation Between Emergent Biosolutions and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both Emergent Biosolutions and Johnson Johnson 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 Emergent Biosolutions and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emergent Biosolutions and Johnson Johnson, you can compare the effects of market volatilities on Emergent Biosolutions 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 Emergent Biosolutions with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emergent Biosolutions and Johnson Johnson.
Diversification Opportunities for Emergent Biosolutions and Johnson Johnson
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Emergent and Johnson is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Biosolutions and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Emergent Biosolutions 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 Emergent Biosolutions 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 Emergent Biosolutions i.e., Emergent Biosolutions and Johnson Johnson go up and down completely randomly.
Pair Corralation between Emergent Biosolutions and Johnson Johnson
Considering the 90-day investment horizon Emergent Biosolutions is expected to generate 9.82 times more return on investment than Johnson Johnson. However, Emergent Biosolutions is 9.82 times more volatile than Johnson Johnson. It trades about 0.08 of its potential returns per unit of risk. Johnson Johnson is currently generating about -0.12 per unit of risk. If you would invest 933.00 in Emergent Biosolutions on August 30, 2024 and sell it today you would earn a total of 78.00 from holding Emergent Biosolutions or generate 8.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emergent Biosolutions vs. Johnson Johnson
Performance |
| Timeline |
| Emergent Biosolutions |
| Johnson Johnson |
Emergent Biosolutions and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emergent Biosolutions and Johnson Johnson
The main advantage of trading using opposite Emergent Biosolutions and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emergent Biosolutions 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.| Emergent Biosolutions vs. Zoetis Inc | Emergent Biosolutions vs. Bausch Health Companies | Emergent Biosolutions vs. Neurocrine Biosciences | Emergent Biosolutions vs. Akanda Corp |
| Johnson Johnson vs. Emergent Biosolutions | Johnson Johnson vs. Bausch Health Companies | Johnson Johnson vs. Neurocrine Biosciences | Johnson Johnson vs. Teva Pharma Industries |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |