Correlation Between Johnson Johnson and OptiNose
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and OptiNose 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 OptiNose into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and OptiNose, you can compare the effects of market volatilities on Johnson Johnson and OptiNose 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 OptiNose. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and OptiNose.
Diversification Opportunities for Johnson Johnson and OptiNose
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Johnson and OptiNose is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and OptiNose in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptiNose 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 OptiNose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptiNose has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and OptiNose go up and down completely randomly.
Pair Corralation between Johnson Johnson and OptiNose
Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.21 times more return on investment than OptiNose. However, Johnson Johnson is 4.73 times less risky than OptiNose. It trades about -0.01 of its potential returns per unit of risk. OptiNose is currently generating about -0.03 per unit of risk. If you would invest 16,731 in Johnson Johnson on September 2, 2024 and sell it today you would lose (1,230) from holding Johnson Johnson or give up 7.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. OptiNose
Performance |
| Timeline |
| Johnson Johnson |
| OptiNose |
Johnson Johnson and OptiNose Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and OptiNose
The main advantage of trading using opposite Johnson Johnson and OptiNose positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, OptiNose 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 OptiNose will offset losses from the drop in OptiNose's long position.| Johnson Johnson vs. Crinetics Pharmaceuticals | Johnson Johnson vs. Enanta Pharmaceuticals | Johnson Johnson vs. Amicus Therapeutics | Johnson Johnson vs. Connect Biopharma Holdings |
| OptiNose vs. Collegium Pharmaceutical | OptiNose vs. Phibro Animal Health | OptiNose vs. ANI Pharmaceuticals | OptiNose vs. Procaps Group SA |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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