Correlation Between Johnson Johnson and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Old Westbury 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 Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Old Westbury Small, you can compare the effects of market volatilities on Johnson Johnson and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Old Westbury.
Diversification Opportunities for Johnson Johnson and Old Westbury
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Johnson and Old is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Old Westbury Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Small 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Small has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Old Westbury go up and down completely randomly.
Pair Corralation between Johnson Johnson and Old Westbury
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Old Westbury. In addition to that, Johnson Johnson is 1.2 times more volatile than Old Westbury Small. It trades about -0.01 of its total potential returns per unit of risk. Old Westbury Small is currently generating about 0.05 per unit of volatility. If you would invest 1,408 in Old Westbury Small on August 24, 2024 and sell it today you would earn a total of 325.00 from holding Old Westbury Small or generate 23.08% 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. Old Westbury Small
Performance |
| Timeline |
| Johnson Johnson |
| Old Westbury Small |
Johnson Johnson and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Old Westbury
The main advantage of trading using opposite Johnson Johnson and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Pfizer Inc | Johnson Johnson vs. Eshallgo Class A | Johnson Johnson vs. Amtech Systems |
| Old Westbury vs. Scharf Global Opportunity | Old Westbury vs. Ab Value Fund | Old Westbury vs. Fa 529 Aggressive | Old Westbury vs. Materials Portfolio Fidelity |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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