Correlation Between Johnson Johnson and IndexIQ
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and IndexIQ 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 IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and IndexIQ, you can compare the effects of market volatilities on Johnson Johnson and IndexIQ 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 IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and IndexIQ.
Diversification Opportunities for Johnson Johnson and IndexIQ
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Johnson and IndexIQ is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ 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 IndexIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and IndexIQ go up and down completely randomly.
Pair Corralation between Johnson Johnson and IndexIQ
If you would invest 15,368 in Johnson Johnson on August 31, 2024 and sell it today you would earn a total of 172.00 from holding Johnson Johnson or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.4% |
| Values | Daily Returns |
Johnson Johnson vs. IndexIQ
Performance |
| Timeline |
| Johnson Johnson |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Johnson Johnson and IndexIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and IndexIQ
The main advantage of trading using opposite Johnson Johnson and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, IndexIQ 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 IndexIQ will offset losses from the drop in IndexIQ's long position.| Johnson Johnson vs. Pfizer Inc | Johnson Johnson vs. RLJ Lodging Trust | Johnson Johnson vs. Aquagold International | Johnson Johnson vs. Stepstone Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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