Correlation Between Johnson Johnson and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and ProShares Ultra 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 Ultra 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 Ultra Nasdaq, you can compare the effects of market volatilities on Johnson Johnson and ProShares Ultra 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 Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and ProShares Ultra.
Diversification Opportunities for Johnson Johnson and ProShares Ultra
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Johnson and ProShares is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and ProShares Ultra Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Nasdaq 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 Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Nasdaq has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and ProShares Ultra go up and down completely randomly.
Pair Corralation between Johnson Johnson and ProShares Ultra
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the ProShares Ultra. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 1.45 times less risky than ProShares Ultra. The stock trades about -0.04 of its potential returns per unit of risk. The ProShares Ultra Nasdaq is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,945 in ProShares Ultra Nasdaq on October 24, 2024 and sell it today you would earn a total of 21.00 from holding ProShares Ultra Nasdaq or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Johnson Johnson vs. ProShares Ultra Nasdaq
Performance |
| Timeline |
| Johnson Johnson |
| ProShares Ultra Nasdaq |
Johnson Johnson and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and ProShares Ultra
The main advantage of trading using opposite Johnson Johnson and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, ProShares Ultra 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 Ultra will offset losses from the drop in ProShares Ultra's long position.| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Bristol Myers Squibb | Johnson Johnson vs. Amgen Inc | Johnson Johnson vs. Pfizer Inc |
| ProShares Ultra vs. ProShares Ultra Cloud | ProShares Ultra vs. Direxion Daily Cloud | ProShares Ultra vs. WisdomTree Cybersecurity |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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