Correlation Between Pfizer and Amgen

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

Diversification Opportunities for Pfizer and Amgen

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Pfizer and Amgen is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Pfizer 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 Pfizer Inc are associated (or correlated) with Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of Pfizer i.e., Pfizer and Amgen go up and down completely randomly.

Pair Corralation between Pfizer and Amgen

Assuming the 90 days trading horizon Pfizer Inc is expected to generate 1.12 times more return on investment than Amgen. However, Pfizer is 1.12 times more volatile than Amgen Inc. It trades about 0.04 of its potential returns per unit of risk. Amgen Inc is currently generating about 0.04 per unit of risk. If you would invest  4,778  in Pfizer Inc on September 5, 2022 and sell it today you would earn a total of  1,828  from holding Pfizer Inc or generate 38.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Pfizer Inc  vs.  Amgen Inc

 Performance (%) 
       Timeline  
Pfizer Inc 
Pfizer Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pfizer sustained solid returns over the last few months and may actually be approaching a breakup point.

Pfizer Price Channel

Amgen Inc 
Amgen Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Amgen Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amgen sustained solid returns over the last few months and may actually be approaching a breakup point.

Amgen Price Channel

Pfizer and Amgen Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pfizer and Amgen

The main advantage of trading using opposite Pfizer and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Amgen 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 Amgen will offset losses from the drop in Amgen's long position.
Pfizer vs. Amgen Inc
Pfizer vs. Petro Rio SA
Pfizer vs. Ambev SA
The idea behind Pfizer Inc and Amgen Inc 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.
Amgen vs. Petro Rio SA
Amgen vs. Ambev SA
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 CEO Directory module to screen CEOs from public companies around the world.

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