Correlation Between Johnson Johnson and ENB Financial
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and ENB Financial 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 ENB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and ENB Financial Corp, you can compare the effects of market volatilities on Johnson Johnson and ENB Financial 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 ENB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and ENB Financial.
Diversification Opportunities for Johnson Johnson and ENB Financial
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Johnson and ENB is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and ENB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENB Financial Corp 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 ENB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENB Financial Corp has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and ENB Financial go up and down completely randomly.
Pair Corralation between Johnson Johnson and ENB Financial
Considering the 90-day investment horizon Johnson Johnson is expected to generate 5.33 times less return on investment than ENB Financial. But when comparing it to its historical volatility, Johnson Johnson is 2.68 times less risky than ENB Financial. It trades about 0.04 of its potential returns per unit of risk. ENB Financial Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,234 in ENB Financial Corp on August 25, 2024 and sell it today you would earn a total of 541.00 from holding ENB Financial Corp or generate 43.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 84.5% |
| Values | Daily Returns |
Johnson Johnson vs. ENB Financial Corp
Performance |
| Timeline |
| Johnson Johnson |
| ENB Financial Corp |
Johnson Johnson and ENB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and ENB Financial
The main advantage of trading using opposite Johnson Johnson and ENB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, ENB Financial 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 ENB Financial will offset losses from the drop in ENB Financial's long position.| Johnson Johnson vs. Capricor Therapeutics | Johnson Johnson vs. Akari Therapeutics PLC | Johnson Johnson vs. Soleno Therapeutics | Johnson Johnson vs. Bio Path Holdings |
| ENB Financial vs. Invesco High Income | ENB Financial vs. Blackrock Muniholdings Ny | ENB Financial vs. MFS Investment Grade | ENB Financial vs. Federated Premier Municipal |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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