Correlation Between Whiting Petroleum and Johnson Johnson

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

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

Diversification Opportunities for Whiting Petroleum and Johnson Johnson

0.54

Correlation Coefficient

Whiting Petroleum  Johnson Johnson

Very weak diversification

The 3 months correlation between Whiting and Johnson is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Whiting Petroleum and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Whiting Petroleum 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 Whiting Petroleum 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 Whiting Petroleum i.e., Whiting Petroleum and Johnson Johnson go up and down completely randomly.

Pair Corralation between Whiting Petroleum and Johnson Johnson

If you would invest  6,803  in Whiting Petroleum on January 19, 2024 and sell it today you would earn a total of  0.00  from holding Whiting Petroleum or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.27%
Values	Daily Returns

Whiting Petroleum  vs.  Johnson Johnson

Whiting Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whiting Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Whiting Petroleum is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Johnson Johnson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Johnson has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Whiting Petroleum and Johnson Johnson

The main advantage of trading using opposite Whiting Petroleum and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whiting Petroleum 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 Whiting Petroleum 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.