Correlation Between Johnson Johnson and Postal Savings
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Postal Savings 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 Postal Savings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Postal Savings Bank, you can compare the effects of market volatilities on Johnson Johnson and Postal Savings 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 Postal Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Postal Savings.
Diversification Opportunities for Johnson Johnson and Postal Savings
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Johnson and Postal is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank 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 Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Postal Savings go up and down completely randomly.
Pair Corralation between Johnson Johnson and Postal Savings
Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.4 times more return on investment than Postal Savings. However, Johnson Johnson is 2.5 times less risky than Postal Savings. It trades about -0.12 of its potential returns per unit of risk. Postal Savings Bank is currently generating about -0.14 per unit of risk. If you would invest 15,882 in Johnson Johnson on August 30, 2024 and sell it today you would lose (342.00) from holding Johnson Johnson or give up 2.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. Postal Savings Bank
Performance |
| Timeline |
| Johnson Johnson |
| Postal Savings Bank |
Johnson Johnson and Postal Savings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Postal Savings
The main advantage of trading using opposite Johnson Johnson and Postal Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Postal Savings 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 Postal Savings will offset losses from the drop in Postal Savings' long position.| Johnson Johnson vs. Emergent Biosolutions | Johnson Johnson vs. Bausch Health Companies | Johnson Johnson vs. Neurocrine Biosciences | Johnson Johnson vs. Teva Pharma Industries |
| Postal Savings vs. Postal Savings Bank | Postal Savings vs. China Everbright Bank | Postal Savings vs. China Merchants Bank | Postal Savings vs. China Citic Bank |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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