Correlation Between Johnson Johnson and Exxon

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

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

Diversification Opportunities for Johnson Johnson and Exxon

0.64

Correlation Coefficient

Johnson Johnson  Exxon

Poor diversification

The 3 months correlation between Johnson and Exxon is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson Co and Exxon Mobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil 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 Co are associated (or correlated) with Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Exxon go up and down completely randomly.

Pair Corralation between Johnson Johnson and Exxon

Assuming the 90 days trading horizon Johnson Johnson Co is expected to generate 0.99 times more return on investment than Exxon. However, Johnson Johnson Co is 1.01 times less risky than Exxon. It trades about 0.17 of its potential returns per unit of risk. Exxon Mobil is currently generating about 0.13 per unit of risk. If you would invest  1,220,000  in Johnson Johnson Co on April 22, 2025 and sell it today you would earn a total of  195,000  from holding Johnson Johnson Co or generate 15.98% return on investment over 90 days.

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

Johnson Johnson Co  vs.  Exxon Mobil

Johnson Johnson

Risk-Adjusted Performance

Good

Over the last 90 days Johnson Johnson Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak forward-looking indicators, Johnson Johnson sustained solid returns over the last few months and may actually be approaching a breakup point.

Exxon Mobil

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Exxon may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Johnson Johnson and Exxon

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

The idea behind Johnson Johnson Co and Exxon Mobil 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.