Correlation Between Live Ventures and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both Live Ventures and Johnson Johnson 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 Live Ventures and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Live Ventures and Johnson Johnson, you can compare the effects of market volatilities on Live Ventures and Johnson Johnson 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 Live Ventures with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Ventures and Johnson Johnson.
Diversification Opportunities for Live Ventures and Johnson Johnson
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Live and Johnson is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Live Ventures and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Live Ventures 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 Live Ventures are associated (or correlated) with Johnson Johnson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Johnson has no effect on the direction of Live Ventures i.e., Live Ventures and Johnson Johnson go up and down completely randomly.
Pair Corralation between Live Ventures and Johnson Johnson
Given the investment horizon of 90 days Live Ventures is expected to under-perform the Johnson Johnson. In addition to that, Live Ventures is 3.41 times more volatile than Johnson Johnson. It trades about -0.08 of its total potential returns per unit of risk. Johnson Johnson is currently generating about -0.02 per unit of volatility. If you would invest 16,075 in Johnson Johnson on September 12, 2024 and sell it today you would lose (1,152) from holding Johnson Johnson or give up 7.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Ventures vs. Johnson Johnson
Performance |
| Timeline |
| Live Ventures |
| Johnson Johnson |
Live Ventures and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Ventures and Johnson Johnson
The main advantage of trading using opposite Live Ventures and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Ventures position performs unexpectedly, Johnson Johnson 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 Johnson Johnson will offset losses from the drop in Johnson Johnson's long position.| Live Ventures vs. Arhaus Inc | Live Ventures vs. Floor Decor Holdings | Live Ventures vs. Haverty Furniture Companies | Live Ventures vs. Kirklands |
| Johnson Johnson vs. Victory Integrity Smallmid Cap | Johnson Johnson vs. Hilton Worldwide Holdings | Johnson Johnson vs. NVIDIA | Johnson Johnson vs. JPMorgan Chase Co |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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