Correlation Between Johnson Johnson and Bristol-Myers Squibb
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Bristol-Myers Squibb 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 Bristol-Myers Squibb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Bristol Myers Squibb, you can compare the effects of market volatilities on Johnson Johnson and Bristol-Myers Squibb 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 Bristol-Myers Squibb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Bristol-Myers Squibb.
Diversification Opportunities for Johnson Johnson and Bristol-Myers Squibb
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Johnson and Bristol-Myers is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Bristol Myers Squibb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myers Squibb 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 Bristol-Myers Squibb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myers Squibb has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Bristol-Myers Squibb go up and down completely randomly.
Pair Corralation between Johnson Johnson and Bristol-Myers Squibb
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Bristol-Myers Squibb. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 4.49 times less risky than Bristol-Myers Squibb. The stock trades about -0.13 of its potential returns per unit of risk. The Bristol Myers Squibb is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 80,055 in Bristol Myers Squibb on August 31, 2024 and sell it today you would earn a total of 20,500 from holding Bristol Myers Squibb or generate 25.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.83% |
| Values | Daily Returns |
Johnson Johnson vs. Bristol Myers Squibb
Performance |
| Timeline |
| Johnson Johnson |
| Bristol Myers Squibb |
Johnson Johnson and Bristol-Myers Squibb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Bristol-Myers Squibb
The main advantage of trading using opposite Johnson Johnson and Bristol-Myers Squibb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Bristol-Myers Squibb 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 Bristol-Myers Squibb will offset losses from the drop in Bristol-Myers Squibb's long position.| Johnson Johnson vs. Pfizer Inc | Johnson Johnson vs. RLJ Lodging Trust | Johnson Johnson vs. Aquagold International | Johnson Johnson vs. Stepstone Group |
| Bristol-Myers Squibb vs. Novartis AG | Bristol-Myers Squibb vs. Bayer AG | Bristol-Myers Squibb vs. Astellas Pharma | Bristol-Myers Squibb vs. Roche Holding AG |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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