Correlation Between Johnson Johnson and Live Ventures
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Live Ventures 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 Live Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Live Ventures, you can compare the effects of market volatilities on Johnson Johnson and Live Ventures 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 Live Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Live Ventures.
Diversification Opportunities for Johnson Johnson and Live Ventures
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and Live is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Live Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Ventures 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 Live Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Ventures has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Live Ventures go up and down completely randomly.
Pair Corralation between Johnson Johnson and Live Ventures
Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.29 times more return on investment than Live Ventures. However, Johnson Johnson is 3.41 times less risky than Live Ventures. It trades about -0.02 of its potential returns per unit of risk. Live Ventures is currently generating about -0.08 per unit of risk. If you would invest 16,075 in Johnson Johnson on September 12, 2024 and sell it today you would lose (1,152) from holding Johnson Johnson or give up 7.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. Live Ventures
Performance |
| Timeline |
| Johnson Johnson |
| Live Ventures |
Johnson Johnson and Live Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Live Ventures
The main advantage of trading using opposite Johnson Johnson and Live Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Live Ventures 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 Live Ventures will offset losses from the drop in Live Ventures' long position.| Johnson Johnson vs. Victory Integrity Smallmid Cap | Johnson Johnson vs. Hilton Worldwide Holdings | Johnson Johnson vs. NVIDIA | Johnson Johnson vs. JPMorgan Chase Co |
| Live Ventures vs. Arhaus Inc | Live Ventures vs. Floor Decor Holdings | Live Ventures vs. Haverty Furniture Companies | Live Ventures vs. Kirklands |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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