Correlation Between Pfizer and Johnson Johnson
Can any of the company-specific risk be diversified away by investing in both Pfizer 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 Pfizer and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Johnson Johnson Co, you can compare the effects of market volatilities on Pfizer 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 Pfizer with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Johnson Johnson.
Diversification Opportunities for Pfizer and Johnson Johnson
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pfizer and Johnson is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Johnson Johnson Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Pfizer 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 Pfizer Inc 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 Pfizer i.e., Pfizer and Johnson Johnson go up and down completely randomly.
Pair Corralation between Pfizer and Johnson Johnson
Assuming the 90 days trading horizon Pfizer Inc is expected to generate 1.28 times more return on investment than Johnson Johnson. However, Pfizer is 1.28 times more volatile than Johnson Johnson Co. It trades about 0.14 of its potential returns per unit of risk. Johnson Johnson Co is currently generating about 0.15 per unit of risk. If you would invest 682,000 in Pfizer Inc on April 24, 2025 and sell it today you would earn a total of 113,000 from holding Pfizer Inc or generate 16.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Pfizer Inc vs. Johnson Johnson Co
Performance |
Timeline |
Pfizer Inc |
Johnson Johnson |
Risk-Adjusted Performance
Good
Weak | Strong |
Pfizer and Johnson Johnson Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pfizer and Johnson Johnson
The main advantage of trading using opposite Pfizer and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer 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 Pfizer Inc and Johnson Johnson Co 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.Johnson Johnson vs. Palantir Technologies | Johnson Johnson vs. Verizon Communications | Johnson Johnson vs. Transportadora de Gas | Johnson Johnson vs. Telecom Argentina |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |