Correlation Between Johnson Johnson and Manitowoc

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

Diversification Opportunities for Johnson Johnson and Manitowoc

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Johnson and Manitowoc is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Manitowoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitowoc 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 Manitowoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitowoc has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Manitowoc go up and down completely randomly.

Pair Corralation between Johnson Johnson and Manitowoc

Considering the 90-day investment horizon Johnson Johnson is expected to generate 0.31 times more return on investment than Manitowoc. However, Johnson Johnson is 3.22 times less risky than Manitowoc. It trades about 0.04 of its potential returns per unit of risk. Manitowoc is currently generating about -0.01 per unit of risk. If you would invest  14,041  in Johnson Johnson on July 4, 2022 and sell it today you would earn a total of  2,295  from holding Johnson Johnson or generate 16.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Johnson Johnson  vs.  Manitowoc

 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 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

Manitowoc 
Manitowoc Performance
0 of 100
Over the last 90 days Manitowoc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in November 2022. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Manitowoc Price Channel

Johnson Johnson and Manitowoc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Johnson Johnson and Manitowoc

The main advantage of trading using opposite Johnson Johnson and Manitowoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Manitowoc 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 Manitowoc will offset losses from the drop in Manitowoc's long position.
Johnson Johnson vs. Amazon Inc
The idea behind Johnson Johnson and Manitowoc 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.
Manitowoc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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