Correlation Between Johnson Johnson and Sekisui Chemical
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Sekisui Chemical 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 Sekisui Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Sekisui Chemical Co, you can compare the effects of market volatilities on Johnson Johnson and Sekisui Chemical 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 Sekisui Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Sekisui Chemical.
Diversification Opportunities for Johnson Johnson and Sekisui Chemical
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Johnson and Sekisui is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Sekisui Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui Chemical 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 Sekisui Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui Chemical has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Sekisui Chemical go up and down completely randomly.
Pair Corralation between Johnson Johnson and Sekisui Chemical
Considering the 90-day investment horizon Johnson Johnson is expected to generate 1.63 times more return on investment than Sekisui Chemical. However, Johnson Johnson is 1.63 times more volatile than Sekisui Chemical Co. It trades about 0.07 of its potential returns per unit of risk. Sekisui Chemical Co is currently generating about 0.11 per unit of risk. If you would invest 14,372 in Johnson Johnson on September 3, 2024 and sell it today you would earn a total of 1,129 from holding Johnson Johnson or generate 7.86% 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. Sekisui Chemical Co
Performance |
| Timeline |
| Johnson Johnson |
| Sekisui Chemical |
Johnson Johnson and Sekisui Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Sekisui Chemical
The main advantage of trading using opposite Johnson Johnson and Sekisui Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Sekisui Chemical 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 Sekisui Chemical will offset losses from the drop in Sekisui Chemical's long position.| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Pfizer Inc | Johnson Johnson vs. Highway Holdings Limited | Johnson Johnson vs. QCR Holdings |
| Sekisui Chemical vs. Grupo Bimbo SAB | Sekisui Chemical vs. Grupo Financiero Inbursa | Sekisui Chemical vs. Becle SA de | Sekisui Chemical vs. HUMANA INC |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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