Correlation Between Johnson Johnson and Aberdeen Income

Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Aberdeen Income 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 Johnson and Aberdeen Income into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Johnson Johnson and Aberdeen Income Credit, you can compare the effects of market volatilities on Johnson Johnson and Aberdeen Income 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 Johnson with a short position of Aberdeen Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Aberdeen Income.

Diversification Opportunities for Johnson Johnson and Aberdeen Income

-0.62

Correlation Coefficient

Johnson Johnson  Aberdeen Income

Excellent diversification

The 3 months correlation between Johnson and Aberdeen is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Aberdeen Income Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Income Credit and Johnson 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 Aberdeen Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Income Credit has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Aberdeen Income go up and down completely randomly.

Pair Corralation between Johnson Johnson and Aberdeen Income

Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Aberdeen Income. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 1.02 times less risky than Aberdeen Income. The stock trades about -0.21 of its potential returns per unit of risk. The Aberdeen Income Credit is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  617.00  in Aberdeen Income Credit on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Aberdeen Income Credit or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Johnson Johnson  vs.  Aberdeen Income Credit

Johnson Johnson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Johnson has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Aberdeen Income Credit

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Aberdeen Income Credit has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable fundamental indicators, Aberdeen Income is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Johnson Johnson and Aberdeen Income

The main advantage of trading using opposite Johnson Johnson and Aberdeen Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Aberdeen Income 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 Aberdeen Income will offset losses from the drop in Aberdeen Income's long position.

The idea behind Johnson Johnson and Aberdeen Income Credit pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.