Correlation Between Johnson Johnson and Lucy Scientific
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Lucy Scientific 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 Lucy Scientific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Lucy Scientific Discovery, you can compare the effects of market volatilities on Johnson Johnson and Lucy Scientific 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 Lucy Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Lucy Scientific.
Diversification Opportunities for Johnson Johnson and Lucy Scientific
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and Lucy is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Lucy Scientific Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucy Scientific Discovery 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 Lucy Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucy Scientific Discovery has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Lucy Scientific go up and down completely randomly.
Pair Corralation between Johnson Johnson and Lucy Scientific
Considering the 90-day investment horizon Johnson Johnson is expected to generate 1225.39 times less return on investment than Lucy Scientific. But when comparing it to its historical volatility, Johnson Johnson is 107.37 times less risky than Lucy Scientific. It trades about 0.01 of its potential returns per unit of risk. Lucy Scientific Discovery is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,140 in Lucy Scientific Discovery on August 31, 2024 and sell it today you would lose (1,138) from holding Lucy Scientific Discovery or give up 99.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 83.16% |
| Values | Daily Returns |
Johnson Johnson vs. Lucy Scientific Discovery
Performance |
| Timeline |
| Johnson Johnson |
| Lucy Scientific Discovery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Johnson Johnson and Lucy Scientific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Lucy Scientific
The main advantage of trading using opposite Johnson Johnson and Lucy Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Lucy Scientific 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 Lucy Scientific will offset losses from the drop in Lucy Scientific's long position.| Johnson Johnson vs. Pfizer Inc | Johnson Johnson vs. RLJ Lodging Trust | Johnson Johnson vs. Aquagold International | Johnson Johnson vs. Stepstone Group |
| Lucy Scientific vs. Shuttle Pharmaceuticals | Lucy Scientific vs. Lifecore Biomedical | Lucy Scientific vs. Journey Medical Corp | Lucy Scientific vs. Akanda Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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