Correlation Between Lyra Therapeutics and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both Lyra Therapeutics 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 Lyra Therapeutics and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyra Therapeutics and Johnson Johnson, you can compare the effects of market volatilities on Lyra Therapeutics 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 Lyra Therapeutics with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyra Therapeutics and Johnson Johnson.
Diversification Opportunities for Lyra Therapeutics and Johnson Johnson
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lyra and Johnson is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lyra Therapeutics and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Lyra Therapeutics 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 Lyra Therapeutics 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 Lyra Therapeutics i.e., Lyra Therapeutics and Johnson Johnson go up and down completely randomly.
Pair Corralation between Lyra Therapeutics and Johnson Johnson
Given the investment horizon of 90 days Lyra Therapeutics is expected to generate 5.74 times more return on investment than Johnson Johnson. However, Lyra Therapeutics is 5.74 times more volatile than Johnson Johnson. It trades about 0.03 of its potential returns per unit of risk. Johnson Johnson is currently generating about -0.13 per unit of risk. If you would invest 20.00 in Lyra Therapeutics on October 13, 2024 and sell it today you would earn a total of 0.00 from holding Lyra Therapeutics or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyra Therapeutics vs. Johnson Johnson
Performance |
| Timeline |
| Lyra Therapeutics |
| Johnson Johnson |
Lyra Therapeutics and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyra Therapeutics and Johnson Johnson
The main advantage of trading using opposite Lyra Therapeutics and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyra Therapeutics 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.| Lyra Therapeutics vs. CytomX Therapeutics | Lyra Therapeutics vs. Assembly Biosciences | Lyra Therapeutics vs. Achilles Therapeutics PLC | Lyra Therapeutics vs. Instil Bio |
| Johnson Johnson vs. Merck Company | Johnson Johnson vs. Bristol Myers Squibb | Johnson Johnson vs. Amgen Inc | Johnson Johnson vs. Pfizer 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 Stocks Directory module to find actively traded stocks across global markets.
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