Correlation Between Johnson Johnson and ProShares Short
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and ProShares Short 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 ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and ProShares Short Financials, you can compare the effects of market volatilities on Johnson Johnson and ProShares Short 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 ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and ProShares Short.
Diversification Opportunities for Johnson Johnson and ProShares Short
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and ProShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and ProShares Short Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Fina 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 ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short Fina has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and ProShares Short go up and down completely randomly.
Pair Corralation between Johnson Johnson and ProShares Short
Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.95 times more return on investment than ProShares Short. However, Johnson Johnson is 1.05 times less risky than ProShares Short. It trades about 0.06 of its potential returns per unit of risk. ProShares Short Financials is currently generating about -0.15 per unit of risk. If you would invest 14,546 in Johnson Johnson on September 1, 2024 and sell it today you would earn a total of 955.00 from holding Johnson Johnson or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Johnson Johnson vs. ProShares Short Financials
Performance |
| Timeline |
| Johnson Johnson |
| ProShares Short Fina |
Johnson Johnson and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and ProShares Short
The main advantage of trading using opposite Johnson Johnson and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, ProShares Short 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 ProShares Short will offset losses from the drop in ProShares Short's long position.| Johnson Johnson vs. Crinetics Pharmaceuticals | Johnson Johnson vs. Enanta Pharmaceuticals | Johnson Johnson vs. Amicus Therapeutics | Johnson Johnson vs. Connect Biopharma Holdings |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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