Correlation Between Johnson Johnson and Saker Aviation
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Saker Aviation 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 Saker Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Saker Aviation Services, you can compare the effects of market volatilities on Johnson Johnson and Saker Aviation 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 Saker Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Saker Aviation.
Diversification Opportunities for Johnson Johnson and Saker Aviation
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Johnson and Saker is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Saker Aviation Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saker Aviation Services 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 Saker Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saker Aviation Services has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Saker Aviation go up and down completely randomly.
Pair Corralation between Johnson Johnson and Saker Aviation
Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.3 times more return on investment than Saker Aviation. However, Johnson Johnson is 3.39 times less risky than Saker Aviation. It trades about 0.07 of its potential returns per unit of risk. Saker Aviation Services is currently generating about -0.02 per unit of risk. If you would invest 14,329 in Johnson Johnson on August 24, 2024 and sell it today you would earn a total of 1,221 from holding Johnson Johnson or generate 8.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Johnson Johnson vs. Saker Aviation Services
Performance |
Timeline |
Johnson Johnson |
Saker Aviation Services |
Johnson Johnson and Saker Aviation Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Johnson Johnson and Saker Aviation
The main advantage of trading using opposite Johnson Johnson and Saker Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Saker Aviation 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 Saker Aviation will offset losses from the drop in Saker Aviation's long position.Johnson Johnson vs. Merck Company | Johnson Johnson vs. Pfizer Inc | Johnson Johnson vs. Small Cap Core | Johnson Johnson vs. Freedom Holding Corp |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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