Correlation Between Johnson Johnson and Glatfelter

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

By analyzing existing cross correlation between Johnson Johnson and Glatfelter, you can compare the effects of market volatilities on Johnson Johnson and Glatfelter 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 Glatfelter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Glatfelter.

Diversification Opportunities for Johnson Johnson and Glatfelter

-0.55

Correlation Coefficient

Johnson Johnson  Glatfelter

Excellent diversification

The 3 months correlation between Johnson and Glatfelter is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Glatfelter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glatfelter 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 Glatfelter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glatfelter has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Glatfelter go up and down completely randomly.

Pair Corralation between Johnson Johnson and Glatfelter

Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Glatfelter. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 4.96 times less risky than Glatfelter. The stock trades about -0.25 of its potential returns per unit of risk. The Glatfelter is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,093  in Glatfelter on September 16, 2024 and sell it today you would earn a total of  12.00  from holding Glatfelter or generate 0.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	56.92%
Values	Daily Returns

Johnson Johnson  vs.  Glatfelter

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 uncertain 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.

Glatfelter

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Glatfelter has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Glatfelter is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Johnson Johnson and Glatfelter

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

The idea behind Johnson Johnson and Glatfelter 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.