Correlation Between Johnson Johnson and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and AstraZeneca PLC 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 AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and AstraZeneca PLC, you can compare the effects of market volatilities on Johnson Johnson and AstraZeneca PLC 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 AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and AstraZeneca PLC.
Diversification Opportunities for Johnson Johnson and AstraZeneca PLC
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Johnson and AstraZeneca is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Johnson Johnson and AstraZeneca PLC
Assuming the 90 days trading horizon Johnson Johnson is expected to generate 0.41 times more return on investment than AstraZeneca PLC. However, Johnson Johnson is 2.41 times less risky than AstraZeneca PLC. It trades about 0.01 of its potential returns per unit of risk. AstraZeneca PLC is currently generating about -0.17 per unit of risk. If you would invest 14,806 in Johnson Johnson on August 30, 2024 and sell it today you would earn a total of 10.00 from holding Johnson Johnson or generate 0.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. AstraZeneca PLC
Performance |
| Timeline |
| Johnson Johnson |
| AstraZeneca PLC |
Johnson Johnson and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and AstraZeneca PLC
The main advantage of trading using opposite Johnson Johnson and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| Johnson Johnson vs. GALENA MINING LTD | Johnson Johnson vs. Jacquet Metal Service | Johnson Johnson vs. Global Ship Lease | Johnson Johnson vs. Zoom Video Communications |
| AstraZeneca PLC vs. Johnson Johnson | AstraZeneca PLC vs. Pfizer Inc | AstraZeneca PLC vs. Amgen Inc | AstraZeneca PLC vs. General Mills |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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