Correlation Between Johnson Johnson and Oracle

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

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

Diversification Opportunities for Johnson Johnson and Oracle

0.78

Correlation Coefficient

Johnson Johnson  Oracle

Poor diversification

The 3 months correlation between Johnson and Oracle is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Oracle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oracle 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 Oracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oracle has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Oracle go up and down completely randomly.

Pair Corralation between Johnson Johnson and Oracle

Considering the 90-day investment horizon Johnson Johnson is expected to generate 6.83 times less return on investment than Oracle. But when comparing it to its historical volatility, Johnson Johnson is 2.27 times less risky than Oracle. It trades about 0.02 of its potential returns per unit of risk. Oracle is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  11,330  in Oracle on May 16, 2025 and sell it today you would earn a total of  13,166  from holding Oracle or generate 116.2% return on investment over 90 days.

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

Johnson Johnson  vs.  Oracle

Johnson Johnson

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Johnson Johnson revealed solid returns over the last few months and may actually be approaching a breakup point.

Oracle

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Oracle disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Johnson Johnson and Oracle

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

The idea behind Johnson Johnson and Oracle 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..