Correlation Between Johnson Controls and Lixil Group
Can any of the company-specific risk be diversified away by investing in both Johnson Controls and Lixil Group 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 Johnson Controls and Lixil Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Controls International and Lixil Group Corp, you can compare the effects of market volatilities on Johnson Controls and Lixil Group 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 Johnson Controls with a short position of Lixil Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Controls and Lixil Group.
Diversification Opportunities for Johnson Controls and Lixil Group
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Johnson and Lixil is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Controls International and Lixil Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixil Group Corp and Johnson Controls 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 Johnson Controls International are associated (or correlated) with Lixil Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixil Group Corp has no effect on the direction of Johnson Controls i.e., Johnson Controls and Lixil Group go up and down completely randomly.
Pair Corralation between Johnson Controls and Lixil Group
Considering the 90-day investment horizon Johnson Controls International is expected to generate 1.17 times more return on investment than Lixil Group. However, Johnson Controls is 1.17 times more volatile than Lixil Group Corp. It trades about 0.19 of its potential returns per unit of risk. Lixil Group Corp is currently generating about -0.05 per unit of risk. If you would invest 7,041 in Johnson Controls International on August 31, 2024 and sell it today you would earn a total of 1,330 from holding Johnson Controls International or generate 18.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Controls International vs. Lixil Group Corp
Performance |
| Timeline |
| Johnson Controls Int |
| Lixil Group Corp |
Johnson Controls and Lixil Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Controls and Lixil Group
The main advantage of trading using opposite Johnson Controls and Lixil Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Controls position performs unexpectedly, Lixil Group 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 Lixil Group will offset losses from the drop in Lixil Group's long position.| Johnson Controls vs. Carrier Global Corp | Johnson Controls vs. Lennox International | Johnson Controls vs. Masco | Johnson Controls vs. Carlisle Companies Incorporated |
| Lixil Group vs. Masco | Lixil Group vs. Carrier Global Corp | Lixil Group vs. Daikin IndustriesLtd | Lixil Group vs. Lennox International |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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