Correlation Between Johnson Johnson and Amgen
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Amgen 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 Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Amgen Inc, you can compare the effects of market volatilities on Johnson Johnson and Amgen 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 Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Amgen.
Diversification Opportunities for Johnson Johnson and Amgen
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Johnson and Amgen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc 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 Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Amgen go up and down completely randomly.
Pair Corralation between Johnson Johnson and Amgen
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Amgen. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 1.47 times less risky than Amgen. The stock trades about -0.01 of its potential returns per unit of risk. The Amgen Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 26,809 in Amgen Inc on August 28, 2024 and sell it today you would earn a total of 2,591 from holding Amgen Inc or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. Amgen Inc
Performance |
| Timeline |
| Johnson Johnson |
| Amgen Inc |
Johnson Johnson and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Amgen
The main advantage of trading using opposite Johnson Johnson and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Amgen 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 Amgen will offset losses from the drop in Amgen's long position.| Johnson Johnson vs. Capricor Therapeutics | Johnson Johnson vs. Soleno Therapeutics | Johnson Johnson vs. Bio Path Holdings | Johnson Johnson vs. Moleculin Biotech |
| Amgen vs. Eliem Therapeutics | Amgen vs. HCW Biologics | Amgen vs. Scpharmaceuticals | Amgen vs. Milestone Pharmaceuticals |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |