Correlation Between Johnson Johnson and Cingulate

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

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

Diversification Opportunities for Johnson Johnson and Cingulate

-0.29

Correlation Coefficient

Johnson Johnson  Cingulate

Very good diversification

The 3 months correlation between Johnson and Cingulate is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Cingulate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate 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 Cingulate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cingulate has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Cingulate go up and down completely randomly.

Pair Corralation between Johnson Johnson and Cingulate

Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.48 times more return on investment than Cingulate. However, Johnson Johnson is 2.08 times less risky than Cingulate. It trades about 0.0 of its potential returns per unit of risk. Cingulate is currently generating about -0.05 per unit of risk. If you would invest  15,489  in Johnson Johnson on February 11, 2025 and sell it today you would lose (67.00) from holding Johnson Johnson or give up 0.43% of portfolio value over 90 days.

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

Johnson Johnson  vs.  Cingulate

Johnson Johnson

Risk-Adjusted Performance

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 relatively steady basic indicators, Johnson Johnson is not utilizing all of its potentials. The newest stock price chaos, may contribute to medium-term losses for the stakeholders.

Cingulate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cingulate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Johnson Johnson and Cingulate

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

The idea behind Johnson Johnson and Cingulate 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.