Correlation Between Johnson Johnson and Oregon Pacific

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

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

Diversification Opportunities for Johnson Johnson and Oregon Pacific

-0.59

Correlation Coefficient

Johnson Johnson  Oregon Pacific

Excellent diversification

The 3 months correlation between Johnson and Oregon is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Oregon Pacific Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oregon Pacific Bancorp 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 Oregon Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oregon Pacific Bancorp has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Oregon Pacific go up and down completely randomly.

Pair Corralation between Johnson Johnson and Oregon Pacific

Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Oregon Pacific. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 1.28 times less risky than Oregon Pacific. The stock trades about -0.13 of its potential returns per unit of risk. The Oregon Pacific Bancorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  776.00  in Oregon Pacific Bancorp on September 3, 2024 and sell it today you would earn a total of  14.00  from holding Oregon Pacific Bancorp or generate 1.8% return on investment over 90 days.

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

Johnson Johnson  vs.  Oregon Pacific Bancorp

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 conflicting 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.

Oregon Pacific Bancorp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oregon Pacific Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Oregon Pacific is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Johnson Johnson and Oregon Pacific

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

The idea behind Johnson Johnson and Oregon Pacific Bancorp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.