Correlation Between Johnson Johnson and Optimi Health
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Optimi Health 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 Optimi Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Optimi Health Corp, you can compare the effects of market volatilities on Johnson Johnson and Optimi Health 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 Optimi Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Optimi Health.
Diversification Opportunities for Johnson Johnson and Optimi Health
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and Optimi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Optimi Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimi Health Corp 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 Optimi Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimi Health Corp has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Optimi Health go up and down completely randomly.
Pair Corralation between Johnson Johnson and Optimi Health
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Optimi Health. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 6.91 times less risky than Optimi Health. The stock trades about -0.01 of its potential returns per unit of risk. The Optimi Health Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Optimi Health Corp on September 3, 2024 and sell it today you would lose (6.00) from holding Optimi Health Corp or give up 30.0% 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. Optimi Health Corp
Performance |
| Timeline |
| Johnson Johnson |
| Optimi Health Corp |
Johnson Johnson and Optimi Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Optimi Health
The main advantage of trading using opposite Johnson Johnson and Optimi Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Optimi Health 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 Optimi Health will offset losses from the drop in Optimi Health's long position.| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Pfizer Inc | Johnson Johnson vs. Highway Holdings Limited | Johnson Johnson vs. QCR Holdings |
| Optimi Health vs. Forafric Global PLC | Optimi Health vs. Forafric Global PLC | Optimi Health vs. GrainCorp Limited | Optimi Health vs. Australian Agricultural |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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