Correlation Between Johnson Johnson and ProShares Short
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and ProShares Short 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 ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and ProShares Short MSCI, you can compare the effects of market volatilities on Johnson Johnson and ProShares Short 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 ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and ProShares Short.
Diversification Opportunities for Johnson Johnson and ProShares Short
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Johnson and ProShares is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and ProShares Short MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short MSCI 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 ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short MSCI has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and ProShares Short go up and down completely randomly.
Pair Corralation between Johnson Johnson and ProShares Short
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the ProShares Short. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 1.07 times less risky than ProShares Short. The stock trades about -0.12 of its potential returns per unit of risk. The ProShares Short MSCI is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,601 in ProShares Short MSCI on August 30, 2024 and sell it today you would earn a total of 54.00 from holding ProShares Short MSCI or generate 3.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. ProShares Short MSCI
Performance |
| Timeline |
| Johnson Johnson |
| ProShares Short MSCI |
Johnson Johnson and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and ProShares Short
The main advantage of trading using opposite Johnson Johnson and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, ProShares Short 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 ProShares Short will offset losses from the drop in ProShares Short's long position.| Johnson Johnson vs. Emergent Biosolutions | Johnson Johnson vs. Bausch Health Companies | Johnson Johnson vs. Neurocrine Biosciences | Johnson Johnson vs. Teva Pharma Industries |
| ProShares Short vs. ProShares Short MSCI | ProShares Short vs. ProShares UltraShort MSCI | ProShares Short vs. ProShares UltraShort MSCI | ProShares Short vs. ProShares Short MidCap400 |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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