Correlation Between Johnson Johnson and Knife River
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Knife River 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 Knife River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Knife River, you can compare the effects of market volatilities on Johnson Johnson and Knife River 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 Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Knife River.
Diversification Opportunities for Johnson Johnson and Knife River
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Johnson and Knife is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River 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 Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Knife River go up and down completely randomly.
Pair Corralation between Johnson Johnson and Knife River
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Knife River. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 4.07 times less risky than Knife River. The stock trades about -0.21 of its potential returns per unit of risk. The Knife River is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 9,345 in Knife River on August 26, 2024 and sell it today you would earn a total of 920.00 from holding Knife River or generate 9.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. Knife River
Performance |
| Timeline |
| Johnson Johnson |
| Knife River |
Johnson Johnson and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Knife River
The main advantage of trading using opposite Johnson Johnson and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Knife River 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 Knife River will offset losses from the drop in Knife River's long position.| Johnson Johnson vs. Capricor Therapeutics | Johnson Johnson vs. Soleno Therapeutics | Johnson Johnson vs. Bio Path Holdings | Johnson Johnson vs. Moleculin Biotech |
| Knife River vs. Cemex SAB de | Knife River vs. Boise Cascad Llc | Knife River vs. CRH PLC ADR | Knife River vs. Eagle Materials |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |