Correlation Between Axsome Therapeutics and Johnson Johnson

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

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

Diversification Opportunities for Axsome Therapeutics and Johnson Johnson

0.82

Correlation Coefficient

Axsome Therapeutics  Johnson Johnson

Very poor diversification

The 3 months correlation between Axsome and Johnson is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Axsome Therapeutics and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Axsome Therapeutics 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 Axsome Therapeutics are associated (or correlated) with Johnson Johnson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Johnson has no effect on the direction of Axsome Therapeutics i.e., Axsome Therapeutics and Johnson Johnson go up and down completely randomly.

Pair Corralation between Axsome Therapeutics and Johnson Johnson

Given the investment horizon of 90 days Axsome Therapeutics is expected to generate 2.49 times more return on investment than Johnson Johnson. However, Axsome Therapeutics is 2.49 times more volatile than Johnson Johnson. It trades about 0.21 of its potential returns per unit of risk. Johnson Johnson is currently generating about 0.28 per unit of risk. If you would invest  10,039  in Axsome Therapeutics on July 27, 2025 and sell it today you would earn a total of  2,916  from holding Axsome Therapeutics or generate 29.05% return on investment over 90 days.

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

Axsome Therapeutics  vs.  Johnson Johnson

Axsome Therapeutics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Axsome Therapeutics are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Axsome Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Johnson Johnson

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Johnson Johnson revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Axsome Therapeutics and Johnson Johnson

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

The idea behind Axsome Therapeutics and Johnson Johnson 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.