Correlation Between SEKISUI CHEMICAL and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both SEKISUI CHEMICAL 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 SEKISUI CHEMICAL and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEKISUI CHEMICAL and Johnson Johnson, you can compare the effects of market volatilities on SEKISUI CHEMICAL 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 SEKISUI CHEMICAL with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEKISUI CHEMICAL and Johnson Johnson.
Diversification Opportunities for SEKISUI CHEMICAL and Johnson Johnson
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SEKISUI and Johnson is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding SEKISUI CHEMICAL and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and SEKISUI CHEMICAL 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 SEKISUI CHEMICAL 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 SEKISUI CHEMICAL i.e., SEKISUI CHEMICAL and Johnson Johnson go up and down completely randomly.
Pair Corralation between SEKISUI CHEMICAL and Johnson Johnson
Assuming the 90 days trading horizon SEKISUI CHEMICAL is expected to generate 1.42 times more return on investment than Johnson Johnson. However, SEKISUI CHEMICAL is 1.42 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 -0.02 per unit of risk. If you would invest 1,280 in SEKISUI CHEMICAL on September 14, 2024 and sell it today you would earn a total of 200.00 from holding SEKISUI CHEMICAL or generate 15.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
SEKISUI CHEMICAL vs. Johnson Johnson
Performance |
| Timeline |
| SEKISUI CHEMICAL |
| Johnson Johnson |
SEKISUI CHEMICAL and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEKISUI CHEMICAL and Johnson Johnson
The main advantage of trading using opposite SEKISUI CHEMICAL and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEKISUI CHEMICAL 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.| SEKISUI CHEMICAL vs. Wayside Technology Group | SEKISUI CHEMICAL vs. PKSHA TECHNOLOGY INC | SEKISUI CHEMICAL vs. SIEM OFFSHORE NEW | SEKISUI CHEMICAL vs. Columbia Sportswear |
| Johnson Johnson vs. SEKISUI CHEMICAL | Johnson Johnson vs. Guidewire Software | Johnson Johnson vs. NISSAN CHEMICAL IND | Johnson Johnson vs. CyberArk Software |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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