Correlation Between Scilex Holding and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both Scilex Holding 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 Scilex Holding and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scilex Holding and Johnson Johnson, you can compare the effects of market volatilities on Scilex Holding 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 Scilex Holding with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scilex Holding and Johnson Johnson.
Diversification Opportunities for Scilex Holding and Johnson Johnson
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scilex and Johnson is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Scilex Holding and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Scilex Holding 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 Scilex Holding 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 Scilex Holding i.e., Scilex Holding and Johnson Johnson go up and down completely randomly.
Pair Corralation between Scilex Holding and Johnson Johnson
Assuming the 90 days horizon Scilex Holding is expected to generate 31.64 times more return on investment than Johnson Johnson. However, Scilex Holding is 31.64 times more volatile than Johnson Johnson. It trades about 0.11 of its potential returns per unit of risk. Johnson Johnson is currently generating about -0.21 per unit of risk. If you would invest 28.00 in Scilex Holding on August 28, 2024 and sell it today you would lose (1.00) from holding Scilex Holding or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scilex Holding vs. Johnson Johnson
Performance |
| Timeline |
| Scilex Holding |
| Johnson Johnson |
Scilex Holding and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scilex Holding and Johnson Johnson
The main advantage of trading using opposite Scilex Holding and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scilex Holding 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.| Scilex Holding vs. Lululemon Athletica | Scilex Holding vs. Nike Inc | Scilex Holding vs. JD Sports Fashion | Scilex Holding vs. Apogee Enterprises |
| Johnson Johnson vs. Capricor Therapeutics | Johnson Johnson vs. Soleno Therapeutics | Johnson Johnson vs. Bio Path Holdings | Johnson Johnson vs. Moleculin Biotech |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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