Correlation Between Johnson Johnson and Haier Smart
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Haier Smart 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 Haier Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Haier Smart Home, you can compare the effects of market volatilities on Johnson Johnson and Haier Smart 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 Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Haier Smart.
Diversification Opportunities for Johnson Johnson and Haier Smart
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Johnson and Haier is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home 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 Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Haier Smart go up and down completely randomly.
Pair Corralation between Johnson Johnson and Haier Smart
Considering the 90-day investment horizon Johnson Johnson is expected to generate 15.58 times less return on investment than Haier Smart. But when comparing it to its historical volatility, Johnson Johnson is 4.0 times less risky than Haier Smart. It trades about 0.01 of its potential returns per unit of risk. Haier Smart Home is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 279.00 in Haier Smart Home on August 27, 2024 and sell it today you would earn a total of 91.00 from holding Haier Smart Home or generate 32.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. Haier Smart Home
Performance |
| Timeline |
| Johnson Johnson |
| Haier Smart Home |
Johnson Johnson and Haier Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Haier Smart
The main advantage of trading using opposite Johnson Johnson and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Haier Smart 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 Haier Smart will offset losses from the drop in Haier Smart's long position.| Johnson Johnson vs. Capricor Therapeutics | Johnson Johnson vs. Soleno Therapeutics | Johnson Johnson vs. Bio Path Holdings | Johnson Johnson vs. Moleculin Biotech |
| Haier Smart vs. La Z Boy Incorporated | Haier Smart vs. MasterBrand | Haier Smart vs. MillerKnoll | Haier Smart vs. Flexsteel Industries |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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