Correlation Between Amgen and Northwest Bancshares

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

Diversification Opportunities for Amgen and Northwest Bancshares

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Amgen and Northwest is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Northwest Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Bancshares 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 Northwest Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Bancshares has no effect on the direction of Amgen i.e., Amgen and Northwest Bancshares go up and down completely randomly.

Pair Corralation between Amgen and Northwest Bancshares

Given the investment horizon of 90 days Amgen Inc is expected to under-perform the Northwest Bancshares. But the stock apears to be less risky and, when comparing its historical volatility, Amgen Inc is 1.24 times less risky than Northwest Bancshares. The stock trades about -0.01 of its potential returns per unit of risk. The Northwest Bancshares is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  933.00  in Northwest Bancshares on June 28, 2022 and sell it today you would earn a total of  457.00  from holding Northwest Bancshares or generate 48.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Amgen Inc  vs.  Northwest Bancshares

 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 latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Amgen Price Channel

Northwest Bancshares 
Northwest Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Northwest Bancshares are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental drivers, Northwest Bancshares may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Northwest Price Channel

Amgen and Northwest Bancshares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amgen and Northwest Bancshares

The main advantage of trading using opposite Amgen and Northwest Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Northwest Bancshares 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 Northwest Bancshares will offset losses from the drop in Northwest Bancshares' long position.
Amgen vs. Kibush Capital Corp
The idea behind Amgen Inc and Northwest Bancshares 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.
Northwest Bancshares vs. Kibush Capital Corp
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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