Correlation Between Johnson Johnson and Valneva SE
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Valneva SE 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 Valneva SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Valneva SE ADR, you can compare the effects of market volatilities on Johnson Johnson and Valneva SE 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 Valneva SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Valneva SE.
Diversification Opportunities for Johnson Johnson and Valneva SE
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and Valneva is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Valneva SE go up and down completely randomly.
Pair Corralation between Johnson Johnson and Valneva SE
Considering the 90-day investment horizon Johnson Johnson is expected to generate 4.16 times less return on investment than Valneva SE. But when comparing it to its historical volatility, Johnson Johnson is 2.14 times less risky than Valneva SE. It trades about 0.19 of its potential returns per unit of risk. Valneva SE ADR is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 463.00 in Valneva SE ADR on November 4, 2024 and sell it today you would earn a total of 115.00 from holding Valneva SE ADR or generate 24.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. Valneva SE ADR
Performance |
| Timeline |
| Johnson Johnson |
| Valneva SE ADR |
Johnson Johnson and Valneva SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Valneva SE
The main advantage of trading using opposite Johnson Johnson and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Valneva SE 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 Valneva SE will offset losses from the drop in Valneva SE's long position.| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Bristol Myers Squibb | Johnson Johnson vs. Amgen Inc | Johnson Johnson vs. Pfizer Inc |
| Valneva SE vs. NuCana PLC | Valneva SE vs. Sage Therapeutic | Valneva SE vs. Sellas Life Sciences | Valneva SE vs. Third Harmonic Bio |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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