Correlation Between Johnson Johnson and LENZ Therapeutics
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and LENZ Therapeutics 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 LENZ Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and LENZ Therapeutics, you can compare the effects of market volatilities on Johnson Johnson and LENZ Therapeutics 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 LENZ Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and LENZ Therapeutics.
Diversification Opportunities for Johnson Johnson and LENZ Therapeutics
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Johnson and LENZ is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and LENZ Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENZ Therapeutics 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 LENZ Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENZ Therapeutics has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and LENZ Therapeutics go up and down completely randomly.
Pair Corralation between Johnson Johnson and LENZ Therapeutics
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the LENZ Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 29.91 times less risky than LENZ Therapeutics. The stock trades about -0.01 of its potential returns per unit of risk. The LENZ Therapeutics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 237.00 in LENZ Therapeutics on August 27, 2024 and sell it today you would earn a total of 3,313 from holding LENZ Therapeutics or generate 1397.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. LENZ Therapeutics
Performance |
| Timeline |
| Johnson Johnson |
| LENZ Therapeutics |
Johnson Johnson and LENZ Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and LENZ Therapeutics
The main advantage of trading using opposite Johnson Johnson and LENZ Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, LENZ Therapeutics 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 LENZ Therapeutics will offset losses from the drop in LENZ Therapeutics' long position.| Johnson Johnson vs. Capricor Therapeutics | Johnson Johnson vs. Soleno Therapeutics | Johnson Johnson vs. Bio Path Holdings | Johnson Johnson vs. Moleculin Biotech |
| LENZ Therapeutics vs. Eliem Therapeutics | LENZ Therapeutics vs. HCW Biologics | LENZ Therapeutics vs. Scpharmaceuticals | LENZ Therapeutics vs. Milestone Pharmaceuticals |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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