Correlation Between Johnson Johnson and Atlantic Wind
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Atlantic Wind 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 Atlantic Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Atlantic Wind Solar, you can compare the effects of market volatilities on Johnson Johnson and Atlantic Wind 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 Atlantic Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Atlantic Wind.
Diversification Opportunities for Johnson Johnson and Atlantic Wind
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and Atlantic is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Atlantic Wind Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Wind Solar 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 Atlantic Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Wind Solar has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Atlantic Wind go up and down completely randomly.
Pair Corralation between Johnson Johnson and Atlantic Wind
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Atlantic Wind. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 10.5 times less risky than Atlantic Wind. The stock trades about -0.01 of its potential returns per unit of risk. The Atlantic Wind Solar is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5.80 in Atlantic Wind Solar on October 24, 2024 and sell it today you would lose (2.05) from holding Atlantic Wind Solar or give up 35.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Johnson Johnson vs. Atlantic Wind Solar
Performance |
| Timeline |
| Johnson Johnson |
| Atlantic Wind Solar |
Johnson Johnson and Atlantic Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Atlantic Wind
The main advantage of trading using opposite Johnson Johnson and Atlantic Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Atlantic Wind 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 Atlantic Wind will offset losses from the drop in Atlantic Wind's long position.| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Bristol Myers Squibb | Johnson Johnson vs. Amgen Inc | Johnson Johnson vs. Pfizer Inc |
| Atlantic Wind vs. Green Stream Holdings | Atlantic Wind vs. VirExit Technologies | Atlantic Wind vs. Clean Vision Corp | Atlantic Wind vs. SolarWindow Technologies |
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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