Correlation Between Allient and Amgen
Can any of the company-specific risk be diversified away by investing in both Allient 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 Allient and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allient and Amgen Inc, you can compare the effects of market volatilities on Allient 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 Allient with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allient and Amgen.
Diversification Opportunities for Allient and Amgen
Pay attention - limited upside
The 3 months correlation between Allient and Amgen is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Allient 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 Allient 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 Allient i.e., Allient and Amgen go up and down completely randomly.
Pair Corralation between Allient and Amgen
Given the investment horizon of 90 days Allient is expected to under-perform the Amgen. In addition to that, Allient is 1.9 times more volatile than Amgen Inc. It trades about -0.02 of its total potential returns per unit of risk. Amgen Inc is currently generating about 0.05 per unit of volatility. If you would invest 22,282 in Amgen Inc on September 12, 2024 and sell it today you would earn a total of 5,293 from holding Amgen Inc or generate 23.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allient vs. Amgen Inc
Performance |
| Timeline |
| Allient |
| Amgen Inc |
Allient and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allient and Amgen
The main advantage of trading using opposite Allient and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allient 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.The idea behind Allient 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. Victory Integrity Smallmid Cap | Amgen vs. Hilton Worldwide Holdings | Amgen vs. NVIDIA | Amgen vs. JPMorgan Chase Co |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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