Correlation Between Johnson Controls and Bilfinger
Can any of the company-specific risk be diversified away by investing in both Johnson Controls and Bilfinger 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 Johnson Controls and Bilfinger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Controls International and Bilfinger SE, you can compare the effects of market volatilities on Johnson Controls and Bilfinger 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 Johnson Controls with a short position of Bilfinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Controls and Bilfinger.
Diversification Opportunities for Johnson Controls and Bilfinger
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Johnson and Bilfinger is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Controls International and Bilfinger SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilfinger SE and Johnson Controls 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 Johnson Controls International are associated (or correlated) with Bilfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilfinger SE has no effect on the direction of Johnson Controls i.e., Johnson Controls and Bilfinger go up and down completely randomly.
Pair Corralation between Johnson Controls and Bilfinger
Assuming the 90 days trading horizon Johnson Controls is expected to generate 4.67 times less return on investment than Bilfinger. But when comparing it to its historical volatility, Johnson Controls International is 1.71 times less risky than Bilfinger. It trades about 0.03 of its potential returns per unit of risk. Bilfinger SE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,635 in Bilfinger SE on September 12, 2024 and sell it today you would earn a total of 130.00 from holding Bilfinger SE or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Johnson Controls International vs. Bilfinger SE
Performance |
| Timeline |
| Johnson Controls Int |
| Bilfinger SE |
Johnson Controls and Bilfinger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Controls and Bilfinger
The main advantage of trading using opposite Johnson Controls and Bilfinger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Controls position performs unexpectedly, Bilfinger 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 Bilfinger will offset losses from the drop in Bilfinger's long position.| Johnson Controls vs. Superior Plus Corp | Johnson Controls vs. SIVERS SEMICONDUCTORS AB | Johnson Controls vs. Norsk Hydro ASA | Johnson Controls vs. Reliance Steel Aluminum |
| Bilfinger vs. BOSTON BEER A | Bilfinger vs. United Breweries Co | Bilfinger vs. MagnaChip Semiconductor Corp | Bilfinger vs. Westinghouse Air Brake |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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