Correlation Between Johnson Johnson and First Wave
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and First Wave 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 First Wave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and First Wave BioPharma, you can compare the effects of market volatilities on Johnson Johnson and First Wave 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 First Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and First Wave.
Diversification Opportunities for Johnson Johnson and First Wave
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Johnson and First is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and First Wave BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Wave BioPharma 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 First Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Wave BioPharma has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and First Wave go up and down completely randomly.
Pair Corralation between Johnson Johnson and First Wave
Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.11 times more return on investment than First Wave. However, Johnson Johnson is 9.22 times less risky than First Wave. It trades about 0.01 of its potential returns per unit of risk. First Wave BioPharma is currently generating about -0.27 per unit of risk. If you would invest 15,379 in Johnson Johnson on August 29, 2024 and sell it today you would earn a total of 73.00 from holding Johnson Johnson or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 13.74% |
| Values | Daily Returns |
Johnson Johnson vs. First Wave BioPharma
Performance |
| Timeline |
| Johnson Johnson |
| First Wave BioPharma |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Johnson Johnson and First Wave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and First Wave
The main advantage of trading using opposite Johnson Johnson and First Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, First Wave 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 First Wave will offset losses from the drop in First Wave's long position.| Johnson Johnson vs. Capricor Therapeutics | Johnson Johnson vs. Soleno Therapeutics | Johnson Johnson vs. Bio Path Holdings | Johnson Johnson vs. Moleculin Biotech |
| First Wave vs. Quoin Pharmaceuticals Ltd | First Wave vs. Revelation Biosciences | First Wave vs. Dermata Therapeutics | First Wave vs. LMF Acquisition Opportunities |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |