Correlation Between JOHNSON and Nike
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By analyzing existing cross correlation between JOHNSON JOHNSON and Nike Inc, you can compare the effects of market volatilities on JOHNSON and Nike 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 with a short position of Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of JOHNSON and Nike.
Diversification Opportunities for JOHNSON and Nike
Modest diversification
The 3 months correlation between JOHNSON and Nike is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding JOHNSON JOHNSON and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and JOHNSON 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 JOHNSON are associated (or correlated) with Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of JOHNSON i.e., JOHNSON and Nike go up and down completely randomly.
Pair Corralation between JOHNSON and Nike
Assuming the 90 days trading horizon JOHNSON JOHNSON is expected to generate 0.26 times more return on investment than Nike. However, JOHNSON JOHNSON is 3.89 times less risky than Nike. It trades about -0.06 of its potential returns per unit of risk. Nike Inc is currently generating about -0.05 per unit of risk. If you would invest 9,472 in JOHNSON JOHNSON on August 30, 2024 and sell it today you would lose (435.00) from holding JOHNSON JOHNSON or give up 4.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
JOHNSON JOHNSON vs. Nike Inc
Performance |
| Timeline |
| JOHNSON JOHNSON |
| Nike Inc |
JOHNSON and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JOHNSON and Nike
The main advantage of trading using opposite JOHNSON and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JOHNSON position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.| JOHNSON vs. AEP TEX INC | JOHNSON vs. US BANK NATIONAL | JOHNSON vs. Nasdaq Inc | JOHNSON vs. Vertiv Holdings Co |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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