Correlation Between Johnson Johnson and Academy Sports

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

Diversification Opportunities for Johnson Johnson and Academy Sports

-0.82
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Johnson and Academy is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Academy Sports And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academy Sports And and Johnson Johnson 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 Johnson are associated (or correlated) with Academy Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Academy Sports And has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Academy Sports go up and down completely randomly.

Pair Corralation between Johnson Johnson and Academy Sports

Considering the 90-day investment horizon Johnson Johnson is expected to generate 7.56 times less return on investment than Academy Sports. But when comparing it to its historical volatility, Johnson Johnson is 3.16 times less risky than Academy Sports. It trades about 0.04 of its potential returns per unit of risk. Academy Sports And is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,315  in Academy Sports And on June 26, 2022 and sell it today you would earn a total of  3,114  from holding Academy Sports And or generate 236.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Johnson Johnson  vs.  Academy Sports And

 Performance (%) 
       Timeline  
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

Academy Sports And 
Academy Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports And are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Academy Sports disclosed solid returns over the last few months and may actually be approaching a breakup point.

Academy Price Channel

Johnson Johnson and Academy Sports Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Johnson Johnson and Academy Sports

The main advantage of trading using opposite Johnson Johnson and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Academy Sports 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 Academy Sports will offset losses from the drop in Academy Sports' long position.
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The idea behind Johnson Johnson and Academy Sports And 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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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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