Correlation Between Amgen and Avax Techs
Can any of the company-specific risk be diversified away by investing in both Amgen and Avax Techs 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 Avax Techs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Avax Techs, you can compare the effects of market volatilities on Amgen and Avax Techs 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 Avax Techs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Avax Techs.
Diversification Opportunities for Amgen and Avax Techs
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amgen and Avax is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Avax Techs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avax Techs 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 Avax Techs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avax Techs has no effect on the direction of Amgen i.e., Amgen and Avax Techs go up and down completely randomly.
Pair Corralation between Amgen and Avax Techs
Given the investment horizon of 90 days Amgen is expected to generate 93.16 times less return on investment than Avax Techs. But when comparing it to its historical volatility, Amgen Inc is 182.08 times less risky than Avax Techs. It trades about 0.42 of its potential returns per unit of risk. Avax Techs is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Avax Techs on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Avax Techs or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Amgen Inc vs. Avax Techs
Performance |
| Timeline |
| Amgen Inc |
| Avax Techs |
Amgen and Avax Techs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Avax Techs
The main advantage of trading using opposite Amgen and Avax Techs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Avax Techs 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 Avax Techs will offset losses from the drop in Avax Techs' long position.The idea behind Amgen Inc and Avax Techs 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.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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