Correlation Between Johnson Johnson and 36164QNA2

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Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and 36164QNA2 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 36164QNA2 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and GE CAP INTL, you can compare the effects of market volatilities on Johnson Johnson and 36164QNA2 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 36164QNA2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and 36164QNA2.

Diversification Opportunities for Johnson Johnson and 36164QNA2

Johnson36164QNA2Diversified AwayJohnson36164QNA2Diversified Away100%
0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Johnson and 36164QNA2 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and GE CAP INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE CAP INTL 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 36164QNA2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE CAP INTL has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and 36164QNA2 go up and down completely randomly.

Pair Corralation between Johnson Johnson and 36164QNA2

Considering the 90-day investment horizon Johnson Johnson is expected to generate 1.32 times more return on investment than 36164QNA2. However, Johnson Johnson is 1.32 times more volatile than GE CAP INTL. It trades about 0.3 of its potential returns per unit of risk. GE CAP INTL is currently generating about 0.16 per unit of risk. If you would invest  14,288  in Johnson Johnson on December 3, 2024 and sell it today you would earn a total of  2,214  from holding Johnson Johnson or generate 15.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy87.5%
ValuesDaily Returns

Johnson Johnson  vs.  GE CAP INTL

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505
JavaScript chart by amCharts 3.21.15JNJ 36164QNA2
       Timeline  
Johnson Johnson 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Johnson Johnson may actually be approaching a critical reversion point that can send shares even higher in April 2025.
JavaScript chart by amCharts 3.21.15JanFebFebMar140145150155160165
GE CAP INTL 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in GE CAP INTL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 36164QNA2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.1591929394959697

Johnson Johnson and 36164QNA2 Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.55-2.66-1.77-0.880.00.921.862.83.74 0.10.20.30.40.50.6
JavaScript chart by amCharts 3.21.15JNJ 36164QNA2
       Returns  

Pair Trading with Johnson Johnson and 36164QNA2

The main advantage of trading using opposite Johnson Johnson and 36164QNA2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, 36164QNA2 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 36164QNA2 will offset losses from the drop in 36164QNA2's long position.
The idea behind Johnson Johnson and GE CAP INTL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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