Correlation Between Johnson Johnson and Cresco Labs
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Cresco Labs 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 Cresco Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Cresco Labs, you can compare the effects of market volatilities on Johnson Johnson and Cresco Labs 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 Cresco Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Cresco Labs.
Diversification Opportunities for Johnson Johnson and Cresco Labs
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and Cresco is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Cresco Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresco Labs 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 Cresco Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresco Labs has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Cresco Labs go up and down completely randomly.
Pair Corralation between Johnson Johnson and Cresco Labs
Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.13 times more return on investment than Cresco Labs. However, Johnson Johnson is 7.67 times less risky than Cresco Labs. It trades about -0.1 of its potential returns per unit of risk. Cresco Labs is currently generating about -0.05 per unit of risk. If you would invest 16,262 in Johnson Johnson on August 28, 2024 and sell it today you would lose (810.00) from holding Johnson Johnson or give up 4.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. Cresco Labs
Performance |
| Timeline |
| Johnson Johnson |
| Cresco Labs |
Johnson Johnson and Cresco Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Cresco Labs
The main advantage of trading using opposite Johnson Johnson and Cresco Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Cresco Labs 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 Cresco Labs will offset losses from the drop in Cresco Labs' long position.| Johnson Johnson vs. Capricor Therapeutics | Johnson Johnson vs. Soleno Therapeutics | Johnson Johnson vs. Bio Path Holdings | Johnson Johnson vs. Moleculin Biotech |
| Cresco Labs vs. Verano Holdings Corp | Cresco Labs vs. AYR Strategies Class | Cresco Labs vs. Green Thumb Industries | Cresco Labs vs. Marimed |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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