Correlation Between Johnson Controls and SAFETY MEDICAL
Can any of the company-specific risk be diversified away by investing in both Johnson Controls and SAFETY MEDICAL 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 SAFETY MEDICAL 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 SAFETY MEDICAL PROD, you can compare the effects of market volatilities on Johnson Controls and SAFETY MEDICAL 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 SAFETY MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Controls and SAFETY MEDICAL.
Diversification Opportunities for Johnson Controls and SAFETY MEDICAL
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Johnson and SAFETY is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Controls International and SAFETY MEDICAL PROD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAFETY MEDICAL PROD 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 SAFETY MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAFETY MEDICAL PROD has no effect on the direction of Johnson Controls i.e., Johnson Controls and SAFETY MEDICAL go up and down completely randomly.
Pair Corralation between Johnson Controls and SAFETY MEDICAL
Assuming the 90 days trading horizon Johnson Controls International is expected to generate 0.53 times more return on investment than SAFETY MEDICAL. However, Johnson Controls International is 1.88 times less risky than SAFETY MEDICAL. It trades about 0.28 of its potential returns per unit of risk. SAFETY MEDICAL PROD is currently generating about -0.43 per unit of risk. If you would invest 7,027 in Johnson Controls International on August 25, 2024 and sell it today you would earn a total of 945.00 from holding Johnson Controls International or generate 13.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Controls International vs. SAFETY MEDICAL PROD
Performance |
| Timeline |
| Johnson Controls Int |
| SAFETY MEDICAL PROD |
Johnson Controls and SAFETY MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Controls and SAFETY MEDICAL
The main advantage of trading using opposite Johnson Controls and SAFETY MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Controls position performs unexpectedly, SAFETY MEDICAL 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 SAFETY MEDICAL will offset losses from the drop in SAFETY MEDICAL's long position.| Johnson Controls vs. SAFETY MEDICAL PROD | Johnson Controls vs. Clearside Biomedical | Johnson Controls vs. United Rentals | Johnson Controls vs. ASPEN TECHINC DL |
| SAFETY MEDICAL vs. Apple Inc | SAFETY MEDICAL vs. Apple Inc | SAFETY MEDICAL vs. Apple Inc | SAFETY MEDICAL vs. Apple Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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