Correlation Between Johnson Johnson and Transocean

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

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

Diversification Opportunities for Johnson Johnson and Transocean

0.35

Correlation Coefficient

Johnson Johnson  Transocean

Weak diversification

The 3 months correlation between Johnson and Transocean is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean 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 Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and Transocean go up and down completely randomly.

Pair Corralation between Johnson Johnson and Transocean

Considering the 90-day investment horizon Johnson Johnson is expected to generate 2.72 times less return on investment than Transocean. But when comparing it to its historical volatility, Johnson Johnson is 2.84 times less risky than Transocean. It trades about 0.11 of its potential returns per unit of risk. Transocean is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Transocean on May 5, 2025 and sell it today you would earn a total of  52.00  from holding Transocean or generate 22.61% return on investment over 90 days.

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

Johnson Johnson  vs.  Transocean

Johnson Johnson

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Johnson are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Johnson Johnson may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Transocean

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transocean are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Transocean reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Johnson Johnson and Transocean

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

The idea behind Johnson Johnson and Transocean 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.