Correlation Between Johnson Johnson and Lebenthal Lisanti
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Lebenthal Lisanti 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 Lebenthal Lisanti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Lebenthal Lisanti Small, you can compare the effects of market volatilities on Johnson Johnson and Lebenthal Lisanti 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 Lebenthal Lisanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Lebenthal Lisanti.
Diversification Opportunities for Johnson Johnson and Lebenthal Lisanti
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Johnson and Lebenthal is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Lebenthal Lisanti Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lebenthal Lisanti Small 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 Lebenthal Lisanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lebenthal Lisanti Small has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Lebenthal Lisanti go up and down completely randomly.
Pair Corralation between Johnson Johnson and Lebenthal Lisanti
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Lebenthal Lisanti. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 1.85 times less risky than Lebenthal Lisanti. The stock trades about -0.33 of its potential returns per unit of risk. The Lebenthal Lisanti Small is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,044 in Lebenthal Lisanti Small on August 24, 2024 and sell it today you would earn a total of 106.00 from holding Lebenthal Lisanti Small or generate 5.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Johnson Johnson vs. Lebenthal Lisanti Small
Performance |
| Timeline |
| Johnson Johnson |
| Lebenthal Lisanti Small |
Johnson Johnson and Lebenthal Lisanti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Lebenthal Lisanti
The main advantage of trading using opposite Johnson Johnson and Lebenthal Lisanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Lebenthal Lisanti 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 Lebenthal Lisanti will offset losses from the drop in Lebenthal Lisanti's long position.| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Pfizer Inc | Johnson Johnson vs. Eshallgo Class A | Johnson Johnson vs. Amtech Systems |
| Lebenthal Lisanti vs. Lord Abbett Growth | Lebenthal Lisanti vs. Queens Road Small | Lebenthal Lisanti vs. Eaton Vance Large Cap |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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