Correlation Between Agilent Technologies and Johnson Johnson

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Can any of the company-specific risk be diversified away by investing in both Agilent Technologies 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 Agilent Technologies and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and Johnson Johnson, you can compare the effects of market volatilities on Agilent Technologies 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 Agilent Technologies with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and Johnson Johnson.

Diversification Opportunities for Agilent Technologies and Johnson Johnson

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Agilent and Johnson is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Agilent Technologies 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 Agilent Technologies 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 Agilent Technologies i.e., Agilent Technologies and Johnson Johnson go up and down completely randomly.

Pair Corralation between Agilent Technologies and Johnson Johnson

Taking into account the 90-day investment horizon Agilent Technologies is expected to under-perform the Johnson Johnson. In addition to that, Agilent Technologies is 1.86 times more volatile than Johnson Johnson. It trades about -0.03 of its total potential returns per unit of risk. Johnson Johnson is currently generating about 0.02 per unit of volatility. If you would invest  15,717  in Johnson Johnson on July 1, 2022 and sell it today you would earn a total of  736.00  from holding Johnson Johnson or generate 4.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Agilent Technologies  vs.  Johnson Johnson

 Performance (%) 
       Timeline  
Agilent Technologies 
Agilent Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Agilent Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Agilent Price Channel

Johnson Johnson 
Johnson Performance
0 of 100
Over the last 90 days Johnson Johnson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Johnson Price Channel

Agilent Technologies and Johnson Johnson Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Agilent Technologies and Johnson Johnson

The main advantage of trading using opposite Agilent Technologies and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies 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.
Agilent Technologies vs. Amazon Inc
The idea behind Agilent Technologies 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.
Johnson Johnson vs. Amazon Inc
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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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