Correlation Between Johnson Johnson and Sitime
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Sitime 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 Sitime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Sitime, you can compare the effects of market volatilities on Johnson Johnson and Sitime 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 Sitime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Sitime.
Diversification Opportunities for Johnson Johnson and Sitime
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Johnson and Sitime is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Sitime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitime 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 Sitime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitime has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Sitime go up and down completely randomly.
Pair Corralation between Johnson Johnson and Sitime
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Sitime. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 6.71 times less risky than Sitime. The stock trades about -0.24 of its potential returns per unit of risk. The Sitime is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 18,186 in Sitime on August 27, 2024 and sell it today you would earn a total of 2,922 from holding Sitime or generate 16.07% 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. Sitime
Performance |
| Timeline |
| Johnson Johnson |
| Sitime |
Johnson Johnson and Sitime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Sitime
The main advantage of trading using opposite Johnson Johnson and Sitime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Sitime 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 Sitime will offset losses from the drop in Sitime's long position.| Johnson Johnson vs. Capricor Therapeutics | Johnson Johnson vs. Soleno Therapeutics | Johnson Johnson vs. Bio Path Holdings | Johnson Johnson vs. Moleculin Biotech |
| Sitime vs. Lattice Semiconductor | Sitime vs. Qorvo Inc | Sitime vs. Microchip Technology | Sitime vs. Silicon Laboratories |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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