Correlation Between Eli Lilly and Johnson Johnson

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

Diversification Opportunities for Eli Lilly and Johnson Johnson

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Eli Lilly and Johnson is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly And and Johnson Johnson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Johnson and Eli Lilly 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 Eli Lilly And 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 Eli Lilly i.e., Eli Lilly and Johnson Johnson go up and down completely randomly.

Pair Corralation between Eli Lilly and Johnson Johnson

Considering the 90-day investment horizon Eli Lilly And is expected to generate 1.69 times more return on investment than Johnson Johnson. However, Eli Lilly is 1.69 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 0.0 per unit of risk. If you would invest  24,586  in Eli Lilly And on July 9, 2022 and sell it today you would earn a total of  8,476  from holding Eli Lilly And or generate 34.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Eli Lilly And  vs.  Johnson Johnson

 Performance (%) 
       Timeline  
Eli Lilly And 
Eli Lilly Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Eli Lilly And are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Eli Lilly is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Eli Lilly 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

Eli Lilly and Johnson Johnson Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eli Lilly and Johnson Johnson

The main advantage of trading using opposite Eli Lilly and Johnson Johnson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly 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.
Eli Lilly vs. Amazon Inc
The idea behind Eli Lilly And 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

Other Complementary Tools

CEO Directory
Screen CEOs from public companies around the world
Go
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Go
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go
Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go
CEO Directory
Screen CEOs from public companies around the world
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
CEO Directory
Screen CEOs from public companies around the world
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go