Correlation Between Johnson Controls and Transdigm Group

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

By analyzing existing cross correlation between Johnson Controls International and Transdigm Group Incorporated, you can compare the effects of market volatilities on Johnson Controls and Transdigm Group 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 Controls with a short position of Transdigm Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Controls and Transdigm Group.

Diversification Opportunities for Johnson Controls and Transdigm Group

0.36

Correlation Coefficient

Johnson Controls  Transdigm Group

Weak diversification

The 3 months correlation between Johnson and Transdigm is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Controls International and Transdigm Group Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transdigm Group and Johnson Controls 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 Controls International are associated (or correlated) with Transdigm Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transdigm Group has no effect on the direction of Johnson Controls i.e., Johnson Controls and Transdigm Group go up and down completely randomly.

Pair Corralation between Johnson Controls and Transdigm Group

Considering the 90-day investment horizon Johnson Controls International is expected to generate 1.21 times more return on investment than Transdigm Group. However, Johnson Controls is 1.21 times more volatile than Transdigm Group Incorporated. It trades about 0.08 of its potential returns per unit of risk. Transdigm Group Incorporated is currently generating about 0.06 per unit of risk. If you would invest  10,740  in Johnson Controls International on September 10, 2025 and sell it today you would earn a total of  758.00  from holding Johnson Controls International or generate 7.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Johnson Controls International  vs.  Transdigm Group Incorporated

Johnson Controls Int

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Controls International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Johnson Controls may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Transdigm Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transdigm Group Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Transdigm Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Johnson Controls and Transdigm Group

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

The idea behind Johnson Controls International and Transdigm Group Incorporated 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.