Correlation Between Amgen and Ardelyx
Can any of the company-specific risk be diversified away by investing in both Amgen and Ardelyx 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 Ardelyx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Ardelyx, you can compare the effects of market volatilities on Amgen and Ardelyx 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 Ardelyx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Ardelyx.
Diversification Opportunities for Amgen and Ardelyx
Poor diversification
The 3 months correlation between Amgen and Ardelyx is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx 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 Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of Amgen i.e., Amgen and Ardelyx go up and down completely randomly.
Pair Corralation between Amgen and Ardelyx
Given the investment horizon of 90 days Amgen Inc is expected to generate 0.35 times more return on investment than Ardelyx. However, Amgen Inc is 2.86 times less risky than Ardelyx. It trades about -0.17 of its potential returns per unit of risk. Ardelyx is currently generating about -0.06 per unit of risk. If you would invest 31,965 in Amgen Inc on August 30, 2024 and sell it today you would lose (3,958) from holding Amgen Inc or give up 12.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amgen Inc vs. Ardelyx
Performance |
| Timeline |
| Amgen Inc |
| Ardelyx |
Amgen and Ardelyx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Ardelyx
The main advantage of trading using opposite Amgen and Ardelyx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Ardelyx 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 Ardelyx will offset losses from the drop in Ardelyx's long position.The idea behind Amgen Inc and Ardelyx 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.| Ardelyx vs. Ikena Oncology | Ardelyx vs. Eliem Therapeutics | Ardelyx vs. HCW Biologics | Ardelyx vs. RenovoRx |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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