Correlation Between Grupo Sports and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both Grupo Sports 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 Grupo Sports and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Sports World and Johnson Johnson, you can compare the effects of market volatilities on Grupo Sports 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 Grupo Sports with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Sports and Johnson Johnson.
Diversification Opportunities for Grupo Sports and Johnson Johnson
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Grupo and Johnson is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Sports World and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Grupo Sports 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 Grupo Sports World 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 Grupo Sports i.e., Grupo Sports and Johnson Johnson go up and down completely randomly.
Pair Corralation between Grupo Sports and Johnson Johnson
Assuming the 90 days trading horizon Grupo Sports World is expected to generate 1.45 times more return on investment than Johnson Johnson. However, Grupo Sports is 1.45 times more volatile than Johnson Johnson. It trades about 0.13 of its potential returns per unit of risk. Johnson Johnson is currently generating about 0.07 per unit of risk. If you would invest 365.00 in Grupo Sports World on September 4, 2024 and sell it today you would earn a total of 273.00 from holding Grupo Sports World or generate 74.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Grupo Sports World vs. Johnson Johnson
Performance |
| Timeline |
| Grupo Sports World |
| Johnson Johnson |
Grupo Sports and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Sports and Johnson Johnson
The main advantage of trading using opposite Grupo Sports and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Sports 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.| Grupo Sports vs. McEwen Mining | Grupo Sports vs. Costco Wholesale | Grupo Sports vs. Hoteles City Express | Grupo Sports vs. GMxico Transportes SAB |
| Johnson Johnson vs. FibraHotel | Johnson Johnson vs. United States Steel | Johnson Johnson vs. Capital One Financial | Johnson Johnson vs. CVS Health |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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