Correlation Between Advisors Capital and Johnson Johnson

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

Diversification Opportunities for Advisors Capital and Johnson Johnson

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Advisors and Johnson is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Advisors Capital Tactical and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Advisors Capital 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 Advisors Capital Tactical 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 Advisors Capital i.e., Advisors Capital and Johnson Johnson go up and down completely randomly.

Pair Corralation between Advisors Capital and Johnson Johnson

Assuming the 90 days horizon Advisors Capital Tactical is expected to under-perform the Johnson Johnson. But the mutual fund apears to be less risky and, when comparing its historical volatility, Advisors Capital Tactical is 4.36 times less risky than Johnson Johnson. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Johnson Johnson is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  14,630  in Johnson Johnson on May 19, 2022 and sell it today you would earn a total of  2,136  from holding Johnson Johnson or generate 14.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy78.27%
ValuesDaily Returns

Advisors Capital Tactical  vs.  Johnson Johnson

 Performance (%) 
       Timeline  
Advisors Capital Tactical 
Advisors Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Advisors Capital Tactical are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Advisors Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Advisors 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 fairly strong basic indicators, Johnson Johnson is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Johnson Price Channel

Advisors Capital and Johnson Johnson Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Advisors Capital and Johnson Johnson

The main advantage of trading using opposite Advisors Capital and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advisors Capital 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.

Advisors Capital Tactical

Pair trading matchups for Advisors Capital

The idea behind Advisors Capital Tactical 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.
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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