Correlation Between G III and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both G III 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 G III and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G III Apparel Group and Johnson Johnson, you can compare the effects of market volatilities on G III 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 G III with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and Johnson Johnson.
Diversification Opportunities for G III and Johnson Johnson
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GI4 and Johnson is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and G III 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 G III Apparel Group 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 G III i.e., G III and Johnson Johnson go up and down completely randomly.
Pair Corralation between G III and Johnson Johnson
Assuming the 90 days trading horizon G III Apparel Group is expected to generate 3.04 times more return on investment than Johnson Johnson. However, G III is 3.04 times more volatile than Johnson Johnson. It trades about 0.11 of its potential returns per unit of risk. Johnson Johnson is currently generating about 0.02 per unit of risk. If you would invest 2,160 in G III Apparel Group on November 3, 2024 and sell it today you would earn a total of 980.00 from holding G III Apparel Group or generate 45.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III Apparel Group vs. Johnson Johnson
Performance |
| Timeline |
| G III Apparel |
| Johnson Johnson |
G III and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G III and Johnson Johnson
The main advantage of trading using opposite G III and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III 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.| G III vs. US FOODS HOLDING | G III vs. PREMIER FOODS | G III vs. United Natural Foods | G III vs. LIFEWAY FOODS |
| Johnson Johnson vs. SYSTEMAIR AB | Johnson Johnson vs. CAL MAINE FOODS | Johnson Johnson vs. United Natural Foods | Johnson Johnson vs. Westinghouse Air Brake |
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 Stocks Directory module to find actively traded stocks across global markets.
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