Correlation Between Bristol-Myers Squibb and Johnson Johnson

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Bristol-Myers Squibb 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 Bristol-Myers Squibb and Johnson Johnson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bristol-Myers Squibb and Johnson Johnson, you can compare the effects of market volatilities on Bristol-Myers Squibb 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 Bristol-Myers Squibb with a short position of Johnson Johnson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristol-Myers Squibb and Johnson Johnson.

Diversification Opportunities for Bristol-Myers Squibb and Johnson Johnson

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Bristol-Myers and Johnson is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bristol-Myers Squibb and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Bristol-Myers Squibb 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 Bristol-Myers Squibb 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 Bristol-Myers Squibb i.e., Bristol-Myers Squibb and Johnson Johnson go up and down completely randomly.

Pair Corralation between Bristol-Myers Squibb and Johnson Johnson

Considering the 90-day investment horizon Bristol-Myers Squibb is expected to generate 1.13 times more return on investment than Johnson Johnson. However, Bristol-Myers Squibb is 1.13 times more volatile than Johnson Johnson. It trades about 0.08 of its potential returns per unit of risk. Johnson Johnson is currently generating about 0.02 per unit of risk. If you would invest  5,789  in Bristol-Myers Squibb on June 26, 2022 and sell it today you would earn a total of  1,282  from holding Bristol-Myers Squibb or generate 22.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Bristol-Myers Squibb  vs.  Johnson Johnson

 Performance (%) 
       Timeline  
Bristol-Myers Squibb 
Bristol-Myers Performance
0 of 100
Over the last 90 days Bristol-Myers Squibb has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest sluggish performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bristol-Myers 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 sluggish 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

Bristol-Myers Squibb and Johnson Johnson Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bristol-Myers Squibb and Johnson Johnson

The main advantage of trading using opposite Bristol-Myers Squibb and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristol-Myers Squibb 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.
Bristol-Myers Squibb vs. Sigma Lithium Corp
The idea behind Bristol-Myers Squibb 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. Sigma Lithium Corp
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 Global Correlations module to find global opportunities by holding instruments from different markets.

Other Complementary Tools

Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Bond Directory
Find actively traded corporate debentures issued by US companies
Go
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Go
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Go