Correlation Between Johnson Johnson and Astra Energy
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Astra Energy 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 Astra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Astra Energy, you can compare the effects of market volatilities on Johnson Johnson and Astra Energy 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 Astra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Astra Energy.
Diversification Opportunities for Johnson Johnson and Astra Energy
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and Astra is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Astra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Energy 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 Astra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Energy has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Astra Energy go up and down completely randomly.
Pair Corralation between Johnson Johnson and Astra Energy
Considering the 90-day investment horizon Johnson Johnson is expected to generate 7.22 times less return on investment than Astra Energy. But when comparing it to its historical volatility, Johnson Johnson is 6.07 times less risky than Astra Energy. It trades about 0.19 of its potential returns per unit of risk. Astra Energy is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 7.80 in Astra Energy on November 4, 2024 and sell it today you would earn a total of 3.20 from holding Astra Energy or generate 41.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Johnson Johnson vs. Astra Energy
Performance |
| Timeline |
| Johnson Johnson |
| Astra Energy |
Johnson Johnson and Astra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Astra Energy
The main advantage of trading using opposite Johnson Johnson and Astra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Astra Energy 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 Astra Energy will offset losses from the drop in Astra Energy's long position.| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Bristol Myers Squibb | Johnson Johnson vs. Amgen Inc | Johnson Johnson vs. Pfizer Inc |
| Astra Energy vs. Alternus Energy Group | Astra Energy vs. American Security Resources | Astra Energy vs. Carnegie Clean Energy | Astra Energy vs. Brenmiller Energy Ltd |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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