Correlation Between Johnson Johnson and Banco Macro
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Banco Macro 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 Johnson and Banco Macro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson Co and Banco Macro SA, you can compare the effects of market volatilities on Johnson Johnson and Banco Macro 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 Johnson with a short position of Banco Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Banco Macro.
Diversification Opportunities for Johnson Johnson and Banco Macro
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Johnson and Banco is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson Co and Banco Macro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Macro SA and Johnson Johnson 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 Johnson Co are associated (or correlated) with Banco Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Macro SA has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Banco Macro go up and down completely randomly.
Pair Corralation between Johnson Johnson and Banco Macro
Assuming the 90 days trading horizon Johnson Johnson Co is expected to under-perform the Banco Macro. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson Co is 2.84 times less risky than Banco Macro. The stock trades about -0.13 of its potential returns per unit of risk. The Banco Macro SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 789,000 in Banco Macro SA on November 2, 2024 and sell it today you would earn a total of 421,000 from holding Banco Macro SA or generate 53.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson Co vs. Banco Macro SA
Performance |
| Timeline |
| Johnson Johnson |
| Banco Macro SA |
Johnson Johnson and Banco Macro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Banco Macro
The main advantage of trading using opposite Johnson Johnson and Banco Macro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Banco Macro 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 Banco Macro will offset losses from the drop in Banco Macro's long position.| Johnson Johnson vs. Transportadora de Gas | Johnson Johnson vs. Harmony Gold Mining | Johnson Johnson vs. Agrometal SAI | Johnson Johnson vs. Compania de Transporte |
| Banco Macro vs. Banco Santander Ro | Banco Macro vs. Banco Patagonia | Banco Macro vs. Grupo Supervielle SA | Banco Macro vs. Banco Hipotecario SA |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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