Correlation Between Johnson Johnson and China Fund
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and China Fund 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 China Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and China Fund, you can compare the effects of market volatilities on Johnson Johnson and China Fund 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 China Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and China Fund.
Diversification Opportunities for Johnson Johnson and China Fund
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Johnson and China is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and China Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Fund 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 China Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Fund has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and China Fund go up and down completely randomly.
Pair Corralation between Johnson Johnson and China Fund
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the China Fund. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 2.52 times less risky than China Fund. The stock trades about -0.36 of its potential returns per unit of risk. The China Fund is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 1,262 in China Fund on August 24, 2024 and sell it today you would lose (71.00) from holding China Fund or give up 5.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. China Fund
Performance |
| Timeline |
| Johnson Johnson |
| China Fund |
Johnson Johnson and China Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and China Fund
The main advantage of trading using opposite Johnson Johnson and China Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, China Fund 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 China Fund will offset losses from the drop in China Fund's long position.| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Pfizer Inc | Johnson Johnson vs. Eshallgo Class A | Johnson Johnson vs. Amtech Systems |
| China Fund vs. Ashmore Group Plc | China Fund vs. Mexico Equity And | China Fund vs. Western Asset Managed | China Fund vs. Blackrock Muniholdings Quality |
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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