Correlation Between Johnson Johnson and BridgeBio Pharma
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and BridgeBio Pharma 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 BridgeBio Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and BridgeBio Pharma, you can compare the effects of market volatilities on Johnson Johnson and BridgeBio Pharma 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 BridgeBio Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and BridgeBio Pharma.
Diversification Opportunities for Johnson Johnson and BridgeBio Pharma
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Johnson and BridgeBio is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and BridgeBio Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BridgeBio Pharma 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 BridgeBio Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BridgeBio Pharma has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and BridgeBio Pharma go up and down completely randomly.
Pair Corralation between Johnson Johnson and BridgeBio Pharma
Considering the 90-day investment horizon Johnson Johnson is expected to generate 140.17 times less return on investment than BridgeBio Pharma. But when comparing it to its historical volatility, Johnson Johnson is 3.82 times less risky than BridgeBio Pharma. It trades about 0.0 of its potential returns per unit of risk. BridgeBio Pharma is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,625 in BridgeBio Pharma on December 24, 2024 and sell it today you would earn a total of 24.00 from holding BridgeBio Pharma or generate 0.66% 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. BridgeBio Pharma
Performance |
| Timeline |
| Johnson Johnson |
| BridgeBio Pharma |
Johnson Johnson and BridgeBio Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and BridgeBio Pharma
The main advantage of trading using opposite Johnson Johnson and BridgeBio Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, BridgeBio Pharma 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 BridgeBio Pharma will offset losses from the drop in BridgeBio Pharma's long position.| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Bristol Myers Squibb | Johnson Johnson vs. Amgen Inc | Johnson Johnson vs. Pfizer Inc |
| BridgeBio Pharma vs. Blueprint Medicines Corp | BridgeBio Pharma vs. Amylyx Pharmaceuticals | BridgeBio Pharma vs. Day One Biopharmaceuticals | BridgeBio Pharma vs. Terns 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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