Correlation Between Johnson Johnson and Mural Oncology

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

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

Diversification Opportunities for Johnson Johnson and Mural Oncology

-0.46

Correlation Coefficient

Johnson Johnson  Mural Oncology

Very good diversification

The 3 months correlation between Johnson and Mural is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Mural Oncology plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mural Oncology plc 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 Mural Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mural Oncology plc has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Mural Oncology go up and down completely randomly.

Pair Corralation between Johnson Johnson and Mural Oncology

Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Mural Oncology. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 4.34 times less risky than Mural Oncology. The stock trades about -0.02 of its potential returns per unit of risk. The Mural Oncology plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  380.00  in Mural Oncology plc on September 18, 2024 and sell it today you would lose (36.00) from holding Mural Oncology plc or give up 9.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	54.84%
Values	Daily Returns

Johnson Johnson  vs.  Mural Oncology plc

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 uncertain performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in January 2025. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Mural Oncology plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mural Oncology plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mural Oncology is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Johnson Johnson and Mural Oncology

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

The idea behind Johnson Johnson and Mural Oncology plc 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.

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