Correlation Between Amgen and Extended Dur

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Can any of the company-specific risk be diversified away by investing in both Amgen and Extended Dur 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 Amgen and Extended Dur into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Extended Dur Trs, you can compare the effects of market volatilities on Amgen and Extended Dur 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 Amgen with a short position of Extended Dur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Extended Dur.

Diversification Opportunities for Amgen and Extended Dur

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Amgen and Extended is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Extended Dur Trs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Dur Trs and Amgen 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 Amgen Inc are associated (or correlated) with Extended Dur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Dur Trs has no effect on the direction of Amgen i.e., Amgen and Extended Dur go up and down completely randomly.

Pair Corralation between Amgen and Extended Dur

Given the investment horizon of 90 days Amgen Inc is expected to under-perform the Extended Dur. In addition to that, Amgen is 1.1 times more volatile than Extended Dur Trs. It trades about -0.21 of its total potential returns per unit of risk. Extended Dur Trs is currently generating about -0.21 per unit of volatility. If you would invest  9,735  in Extended Dur Trs on June 26, 2022 and sell it today you would lose (673.00)  from holding Extended Dur Trs or give up 6.91% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Amgen Inc  vs.  Extended Dur Trs

 Performance (%) 
       Timeline  
Amgen Inc 
Amgen Performance
0 of 100
Over the last 90 days Amgen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Amgen is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.

Amgen Price Channel

Extended Dur Trs 
Extended Performance
0 of 100
Over the last 90 days Extended Dur Trs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Extended Dur is not utilizing all of its potentials. The new stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Extended Price Channel

Amgen and Extended Dur Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amgen and Extended Dur

The main advantage of trading using opposite Amgen and Extended Dur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Extended Dur 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 Extended Dur will offset losses from the drop in Extended Dur's long position.
Amgen vs. Sigma Lithium Corp
The idea behind Amgen Inc and Extended Dur Trs 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.
Extended Dur vs. International Business Machines
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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