Correlation Between Johnson Johnson and MKAM ETF
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and MKAM ETF 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 MKAM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and MKAM ETF, you can compare the effects of market volatilities on Johnson Johnson and MKAM ETF 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 MKAM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and MKAM ETF.
Diversification Opportunities for Johnson Johnson and MKAM ETF
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Johnson and MKAM is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and MKAM ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKAM ETF 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 MKAM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKAM ETF has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and MKAM ETF go up and down completely randomly.
Pair Corralation between Johnson Johnson and MKAM ETF
Considering the 90-day investment horizon Johnson Johnson is expected to generate 2.51 times more return on investment than MKAM ETF. However, Johnson Johnson is 2.51 times more volatile than MKAM ETF. It trades about 0.07 of its potential returns per unit of risk. MKAM ETF is currently generating about 0.04 per unit of risk. If you would invest 14,527 in Johnson Johnson on October 23, 2024 and sell it today you would earn a total of 176.00 from holding Johnson Johnson or generate 1.21% 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. MKAM ETF
Performance |
| Timeline |
| Johnson Johnson |
| MKAM ETF |
Johnson Johnson and MKAM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and MKAM ETF
The main advantage of trading using opposite Johnson Johnson and MKAM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, MKAM ETF 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 MKAM ETF will offset losses from the drop in MKAM ETF's long position.| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Bristol Myers Squibb | Johnson Johnson vs. Amgen Inc | Johnson Johnson vs. Pfizer Inc |
| MKAM ETF vs. FT Vest Equity | MKAM ETF vs. Northern Lights | MKAM ETF vs. Dimensional International High | MKAM ETF vs. JPMorgan Fundamental Data |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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