Correlation Between Johnson Johnson and LightPath Technologies
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson and LightPath Technologies 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 LightPath Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and LightPath Technologies, you can compare the effects of market volatilities on Johnson Johnson and LightPath Technologies 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 LightPath Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and LightPath Technologies.
Diversification Opportunities for Johnson Johnson and LightPath Technologies
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Johnson and LightPath is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and LightPath Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LightPath Technologies 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 LightPath Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LightPath Technologies has no effect on the direction of Johnson Johnson i.e., Johnson Johnson and LightPath Technologies go up and down completely randomly.
Pair Corralation between Johnson Johnson and LightPath Technologies
Considering the 90-day investment horizon Johnson Johnson is expected to under-perform the LightPath Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Johnson Johnson is 4.76 times less risky than LightPath Technologies. The stock trades about -0.01 of its potential returns per unit of risk. The LightPath Technologies is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 202.00 in LightPath Technologies on April 17, 2025 and sell it today you would earn a total of 127.00 from holding LightPath Technologies or generate 62.87% 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. LightPath Technologies
Performance |
| Timeline |
| Johnson Johnson |
| LightPath Technologies |
Johnson Johnson and LightPath Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and LightPath Technologies
The main advantage of trading using opposite Johnson Johnson and LightPath Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson position performs unexpectedly, LightPath Technologies 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 LightPath Technologies will offset losses from the drop in LightPath Technologies' long position.| Johnson Johnson vs. Inhibrx Biosciences, | Johnson Johnson vs. Protagonist Therapeutics | Johnson Johnson vs. Larimar Therapeutics | Johnson Johnson vs. Viridian Therapeutics |
| LightPath Technologies vs. Methode Electronics | LightPath Technologies vs. OSI Systems | LightPath Technologies vs. Plexus Corp | LightPath Technologies vs. CTS Corporation |
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 the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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