Correlation Between Johnson Johnson and Bayer AG
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By analyzing existing cross correlation between Johnson Johnson and Bayer AG NA, you can compare the effects of market volatilities on Johnson Johnson and Bayer AG 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 Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Bayer AG.
Diversification Opportunities for Johnson Johnson and Bayer AG
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Johnson and Bayer is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Bayer AG NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG NA 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 are associated (or correlated) with Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG NA has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Bayer AG go up and down completely randomly.
Pair Corralation between Johnson Johnson and Bayer AG
Assuming the 90 days trading horizon Johnson Johnson is expected to generate 0.49 times more return on investment than Bayer AG. However, Johnson Johnson is 2.02 times less risky than Bayer AG. It trades about -0.01 of its potential returns per unit of risk. Bayer AG NA is currently generating about -0.09 per unit of risk. If you would invest 15,667 in Johnson Johnson on August 30, 2024 and sell it today you would lose (851.00) from holding Johnson Johnson or give up 5.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. Bayer AG NA
Performance |
| Timeline |
| Johnson Johnson |
| Bayer AG NA |
Johnson Johnson and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Bayer AG
The main advantage of trading using opposite Johnson Johnson and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG's long position.| Johnson Johnson vs. Choice Hotels International | Johnson Johnson vs. InterContinental Hotels Group | Johnson Johnson vs. Perseus Mining Limited | Johnson Johnson vs. GALENA MINING LTD |
| Bayer AG vs. Gruppo Mutuionline SpA | Bayer AG vs. Fevertree Drinks PLC | Bayer AG vs. PICKN PAY STORES | Bayer AG vs. AIR PRODCHEMICALS |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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