Correlation Between Smurfit Kappa and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both Smurfit Kappa 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 Smurfit Kappa and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smurfit Kappa Group and Johnson Johnson, you can compare the effects of market volatilities on Smurfit Kappa 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 Smurfit Kappa with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit Kappa and Johnson Johnson.
Diversification Opportunities for Smurfit Kappa and Johnson Johnson
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smurfit and Johnson is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit Kappa Group and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Smurfit Kappa 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 Smurfit Kappa Group 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 Smurfit Kappa i.e., Smurfit Kappa and Johnson Johnson go up and down completely randomly.
Pair Corralation between Smurfit Kappa and Johnson Johnson
Assuming the 90 days horizon Smurfit Kappa Group is expected to generate 4.16 times more return on investment than Johnson Johnson. However, Smurfit Kappa is 4.16 times more volatile than Johnson Johnson. It trades about 0.3 of its potential returns per unit of risk. Johnson Johnson is currently generating about 0.01 per unit of risk. If you would invest 4,104 in Smurfit Kappa Group on August 30, 2024 and sell it today you would earn a total of 1,196 from holding Smurfit Kappa Group or generate 29.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smurfit Kappa Group vs. Johnson Johnson
Performance |
| Timeline |
| Smurfit Kappa Group |
| Johnson Johnson |
Smurfit Kappa and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smurfit Kappa and Johnson Johnson
The main advantage of trading using opposite Smurfit Kappa and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit Kappa 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.| Smurfit Kappa vs. Amcor plc | Smurfit Kappa vs. Packaging of | Smurfit Kappa vs. CCL Industries | Smurfit Kappa vs. AptarGroup |
| Johnson Johnson vs. GALENA MINING LTD | Johnson Johnson vs. Jacquet Metal Service | Johnson Johnson vs. Global Ship Lease | Johnson Johnson vs. Zoom Video Communications |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |