Correlation Between Johnson Johnson and Southern BancShares
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Southern BancShares 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 Southern BancShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Southern BancShares PFD, you can compare the effects of market volatilities on Johnson Johnson and Southern BancShares 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 Southern BancShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Southern BancShares.
Diversification Opportunities for Johnson Johnson and Southern BancShares
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and Southern is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Southern BancShares PFD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern BancShares PFD 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 Southern BancShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern BancShares PFD has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Southern BancShares go up and down completely randomly.
Pair Corralation between Johnson Johnson and Southern BancShares
Considering the 90-day investment horizon Johnson Johnson is expected to generate 61.96 times more return on investment than Southern BancShares. However, Johnson Johnson is 61.96 times more volatile than Southern BancShares PFD. It trades about 0.07 of its potential returns per unit of risk. Southern BancShares PFD is currently generating about 0.22 per unit of risk. If you would invest 14,527 in Johnson Johnson on October 22, 2024 and sell it today you would earn a total of 176.00 from holding Johnson Johnson or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Johnson Johnson vs. Southern BancShares PFD
Performance |
| Timeline |
| Johnson Johnson |
| Southern BancShares PFD |
Johnson Johnson and Southern BancShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Southern BancShares
The main advantage of trading using opposite Johnson Johnson and Southern BancShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Southern BancShares 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 Southern BancShares will offset losses from the drop in Southern BancShares' long position.| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Bristol Myers Squibb | Johnson Johnson vs. Amgen Inc | Johnson Johnson vs. Pfizer Inc |
| Southern BancShares vs. Mattel Inc | Southern BancShares vs. Tencent Music Entertainment | Southern BancShares vs. Brunswick | Southern BancShares vs. Canlan Ice Sports |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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