Correlation Between Public Storage and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both Public Storage 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 Public Storage and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and Johnson Johnson, you can compare the effects of market volatilities on Public Storage 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 Public Storage with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and Johnson Johnson.
Diversification Opportunities for Public Storage and Johnson Johnson
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Public and Johnson is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Public Storage 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 Public Storage 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 Public Storage i.e., Public Storage and Johnson Johnson go up and down completely randomly.
Pair Corralation between Public Storage and Johnson Johnson
Assuming the 90 days trading horizon Public Storage is expected to generate 0.56 times more return on investment than Johnson Johnson. However, Public Storage is 1.79 times less risky than Johnson Johnson. It trades about -0.21 of its potential returns per unit of risk. Johnson Johnson is currently generating about -0.15 per unit of risk. If you would invest 37,500 in Public Storage on October 25, 2024 and sell it today you would lose (1,356) from holding Public Storage or give up 3.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Storage vs. Johnson Johnson
Performance |
| Timeline |
| Public Storage |
| Johnson Johnson |
Public Storage and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and Johnson Johnson
The main advantage of trading using opposite Public Storage and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage 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.| Public Storage vs. Mitsubishi UFJ Financial | Public Storage vs. Deutsche Bank Aktiengesellschaft | Public Storage vs. SVB Financial Group | Public Storage vs. HDFC Bank Limited |
| Johnson Johnson vs. Public Storage | Johnson Johnson vs. MAHLE Metal Leve | Johnson Johnson vs. American Airlines Group | Johnson Johnson vs. Metalurgica Gerdau SA |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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