Correlation Between Johnson Johnson and Voya Equity

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

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

Diversification Opportunities for Johnson Johnson and Voya Equity

0.7

Correlation Coefficient

Johnson Johnson  Voya Equity

Poor diversification

The 3 months correlation between Johnson and Voya is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Voya Equity Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Equity Trust 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 Voya Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Equity Trust has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Voya Equity go up and down completely randomly.

Pair Corralation between Johnson Johnson and Voya Equity

If you would invest  869.00  in Voya Equity Trust on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Voya Equity Trust or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.54%
Values	Daily Returns

Johnson Johnson  vs.  Voya Equity Trust

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.

Voya Equity Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Equity Trust has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Voya Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Johnson Johnson and Voya Equity

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

The idea behind Johnson Johnson and Voya Equity Trust 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.