Correlation Between Johnson Johnson and Elevate Credit

Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and Elevate Credit 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 Elevate Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Johnson Johnson and Elevate Credit, you can compare the effects of market volatilities on Johnson Johnson and Elevate Credit 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 Elevate Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Elevate Credit.

Diversification Opportunities for Johnson Johnson and Elevate Credit

-0.52

Correlation Coefficient

Johnson Johnson  Elevate Credit

Excellent diversification

The 3 months correlation between Johnson and Elevate is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Elevate Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elevate Credit 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 Elevate Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elevate Credit has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Elevate Credit go up and down completely randomly.

Pair Corralation between Johnson Johnson and Elevate Credit

Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the Elevate Credit. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 5.66 times less risky than Elevate Credit. The stock trades about -0.02 of its potential returns per unit of risk. The Elevate Credit is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  240.00  in Elevate Credit on February 4, 2024 and sell it today you would lose (53.00) from holding Elevate Credit or give up 22.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	40.0%
Values	Daily Returns

Johnson Johnson  vs.  Elevate Credit

Johnson Johnson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Johnson has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Johnson Johnson is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Elevate Credit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elevate Credit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Elevate Credit is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Johnson Johnson and Elevate Credit

The main advantage of trading using opposite Johnson Johnson and Elevate Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, Elevate Credit 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 Elevate Credit will offset losses from the drop in Elevate Credit's long position.

The idea behind Johnson Johnson and Elevate Credit 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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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 the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.