Correlation Between Johnson Controls and WSP Global

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

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

Diversification Opportunities for Johnson Controls and WSP Global

0.88

Correlation Coefficient

Johnson Controls  WSP Global

Very poor diversification

The 3 months correlation between Johnson and WSP is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Controls International and WSP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSP Global and Johnson Controls 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 Controls International are associated (or correlated) with WSP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSP Global has no effect on the direction of Johnson Controls i.e., Johnson Controls and WSP Global go up and down completely randomly.

Pair Corralation between Johnson Controls and WSP Global

Assuming the 90 days trading horizon Johnson Controls International is expected to generate 1.44 times more return on investment than WSP Global. However, Johnson Controls is 1.44 times more volatile than WSP Global. It trades about 0.31 of its potential returns per unit of risk. WSP Global is currently generating about 0.2 per unit of risk. If you would invest  6,426  in Johnson Controls International on April 22, 2025 and sell it today you would earn a total of  2,903  from holding Johnson Controls International or generate 45.18% return on investment over 90 days.

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

Johnson Controls International  vs.  WSP Global

Johnson Controls Int

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Controls International are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Johnson Controls reported solid returns over the last few months and may actually be approaching a breakup point.

WSP Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WSP Global are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WSP Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Johnson Controls and WSP Global

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

The idea behind Johnson Controls International and WSP Global 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.