Correlation Between Johnson Johnson and Lion One
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Lion One 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 Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Lion One Metals, you can compare the effects of market volatilities on Johnson Johnson and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Lion One.
Diversification Opportunities for Johnson Johnson and Lion One
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Johnson and Lion is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Lion One go up and down completely randomly.
Pair Corralation between Johnson Johnson and Lion One
Assuming the 90 days trading horizon Johnson Johnson is expected to generate 0.26 times more return on investment than Lion One. However, Johnson Johnson is 3.86 times less risky than Lion One. It trades about 0.0 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.1 per unit of risk. If you would invest 14,718 in Johnson Johnson on September 2, 2024 and sell it today you would lose (2.00) from holding Johnson Johnson or give up 0.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. Lion One Metals
Performance |
| Timeline |
| Johnson Johnson |
| Lion One Metals |
Johnson Johnson and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Lion One
The main advantage of trading using opposite Johnson Johnson and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| Johnson Johnson vs. Lion One Metals | Johnson Johnson vs. Cogent Communications Holdings | Johnson Johnson vs. SBA Communications Corp | Johnson Johnson vs. JAPAN TOBACCO UNSPADR12 |
| Lion One vs. ZIJIN MINH UNSPADR20 | Lion One vs. Superior Plus Corp | Lion One vs. NMI Holdings | Lion One vs. Origin Agritech |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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