Correlation Between Johnson Johnson and Great Elm
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Great Elm 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 Great Elm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Great Elm Capital, you can compare the effects of market volatilities on Johnson Johnson and Great Elm 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 Great Elm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Great Elm.
Diversification Opportunities for Johnson Johnson and Great Elm
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Johnson and Great is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Great Elm Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Elm Capital 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 Great Elm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Elm Capital has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Great Elm go up and down completely randomly.
Pair Corralation between Johnson Johnson and Great Elm
Considering the 90-day investment horizon Johnson Johnson is expected to generate 38.0 times less return on investment than Great Elm. In addition to that, Johnson Johnson is 2.23 times more volatile than Great Elm Capital. It trades about 0.0 of its total potential returns per unit of risk. Great Elm Capital is currently generating about 0.06 per unit of volatility. If you would invest 2,408 in Great Elm Capital on September 1, 2024 and sell it today you would earn a total of 95.00 from holding Great Elm Capital or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.32% |
| Values | Daily Returns |
Johnson Johnson vs. Great Elm Capital
Performance |
| Timeline |
| Johnson Johnson |
| Great Elm Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Johnson Johnson and Great Elm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Great Elm
The main advantage of trading using opposite Johnson Johnson and Great Elm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Great Elm 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 Great Elm will offset losses from the drop in Great Elm's long position.| Johnson Johnson vs. Crinetics Pharmaceuticals | Johnson Johnson vs. Enanta Pharmaceuticals | Johnson Johnson vs. Amicus Therapeutics | Johnson Johnson vs. Connect Biopharma Holdings |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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