Correlation Between Astellas Pharma and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both Astellas Pharma 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 Astellas Pharma and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astellas Pharma and Johnson Johnson, you can compare the effects of market volatilities on Astellas Pharma 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 Astellas Pharma with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astellas Pharma and Johnson Johnson.
Diversification Opportunities for Astellas Pharma and Johnson Johnson
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Astellas and Johnson is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Astellas Pharma and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Astellas Pharma 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 Astellas Pharma 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 Astellas Pharma i.e., Astellas Pharma and Johnson Johnson go up and down completely randomly.
Pair Corralation between Astellas Pharma and Johnson Johnson
Assuming the 90 days horizon Astellas Pharma is expected to under-perform the Johnson Johnson. In addition to that, Astellas Pharma is 1.94 times more volatile than Johnson Johnson. It trades about -0.02 of its total potential returns per unit of risk. Johnson Johnson is currently generating about 0.04 per unit of volatility. If you would invest 13,454 in Johnson Johnson on August 25, 2024 and sell it today you would earn a total of 1,416 from holding Johnson Johnson or generate 10.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astellas Pharma vs. Johnson Johnson
Performance |
| Timeline |
| Astellas Pharma |
| Johnson Johnson |
Astellas Pharma and Johnson Johnson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astellas Pharma and Johnson Johnson
The main advantage of trading using opposite Astellas Pharma and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astellas Pharma 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.| Astellas Pharma vs. Johnson Johnson | Astellas Pharma vs. Merck Co | Astellas Pharma vs. Roche Holding Ltd | Astellas Pharma vs. Amgen Inc |
| Johnson Johnson vs. Merck Co | Johnson Johnson vs. Roche Holding Ltd | Johnson Johnson vs. Amgen Inc | Johnson Johnson vs. Bayer AG NA |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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