Correlation Between Johnson Johnson and GSE Systems
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and GSE Systems 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 GSE Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and GSE Systems, you can compare the effects of market volatilities on Johnson Johnson and GSE Systems 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 GSE Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and GSE Systems.
Diversification Opportunities for Johnson Johnson and GSE Systems
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Johnson and GSE is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and GSE Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSE Systems 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 GSE Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSE Systems has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and GSE Systems go up and down completely randomly.
Pair Corralation between Johnson Johnson and GSE Systems
If you would invest 459.00 in GSE Systems on September 13, 2024 and sell it today you would earn a total of 0.00 from holding GSE Systems or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Johnson Johnson vs. GSE Systems
Performance |
| Timeline |
| Johnson Johnson |
| GSE Systems |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Johnson Johnson and GSE Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and GSE Systems
The main advantage of trading using opposite Johnson Johnson and GSE Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, GSE Systems 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 GSE Systems will offset losses from the drop in GSE Systems' long position.| Johnson Johnson vs. Emergent Biosolutions | Johnson Johnson vs. Bausch Health Companies | Johnson Johnson vs. Neurocrine Biosciences | Johnson Johnson vs. Teva Pharma Industries |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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