Correlation Between Amgen and Cheniere Energy
Can any of the company-specific risk be diversified away by investing in both Amgen and Cheniere Energy 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 Cheniere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Cheniere Energy Partners, you can compare the effects of market volatilities on Amgen and Cheniere Energy 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 Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Cheniere Energy.
Diversification Opportunities for Amgen and Cheniere Energy
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amgen and Cheniere is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners 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 Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of Amgen i.e., Amgen and Cheniere Energy go up and down completely randomly.
Pair Corralation between Amgen and Cheniere Energy
Given the investment horizon of 90 days Amgen is expected to generate 1.71 times less return on investment than Cheniere Energy. But when comparing it to its historical volatility, Amgen Inc is 1.24 times less risky than Cheniere Energy. It trades about 0.01 of its potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,926 in Cheniere Energy Partners on September 19, 2024 and sell it today you would earn a total of 459.00 from holding Cheniere Energy Partners or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amgen Inc vs. Cheniere Energy Partners
Performance |
| Timeline |
| Amgen Inc |
| Cheniere Energy Partners |
Amgen and Cheniere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Cheniere Energy
The main advantage of trading using opposite Amgen and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Cheniere Energy 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 Cheniere Energy will offset losses from the drop in Cheniere Energy's long position.The idea behind Amgen Inc and Cheniere Energy Partners 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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