Correlation Between Johnson Johnson and Mainstay
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Mainstay 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 Mainstay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Mainstay Sp 500, you can compare the effects of market volatilities on Johnson Johnson and Mainstay 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 Mainstay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Mainstay.
Diversification Opportunities for Johnson Johnson and Mainstay
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Johnson and Mainstay is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Mainstay Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Sp 500 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 Mainstay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Sp 500 has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Mainstay go up and down completely randomly.
Pair Corralation between Johnson Johnson and Mainstay
Considering the 90-day investment horizon Johnson Johnson is expected to generate 4.95 times less return on investment than Mainstay. In addition to that, Johnson Johnson is 1.19 times more volatile than Mainstay Sp 500. It trades about 0.02 of its total potential returns per unit of risk. Mainstay Sp 500 is currently generating about 0.13 per unit of volatility. If you would invest 5,308 in Mainstay Sp 500 on August 24, 2024 and sell it today you would earn a total of 1,495 from holding Mainstay Sp 500 or generate 28.17% 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. Mainstay Sp 500
Performance |
| Timeline |
| Johnson Johnson |
| Mainstay Sp 500 |
Johnson Johnson and Mainstay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Mainstay
The main advantage of trading using opposite Johnson Johnson and Mainstay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Mainstay 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 Mainstay will offset losses from the drop in Mainstay's long position.| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Pfizer Inc | Johnson Johnson vs. Eshallgo Class A | Johnson Johnson vs. Amtech Systems |
| Mainstay vs. Champlain Small | Mainstay vs. Tax Managed Mid Small | Mainstay vs. Touchstone Small Cap | Mainstay vs. Small Pany Growth |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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