Correlation Between Amgen and Lion One
Can any of the company-specific risk be diversified away by investing in both Amgen and Lion One 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 Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Lion One Metals, you can compare the effects of market volatilities on Amgen and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Lion One.
Diversification Opportunities for Amgen and Lion One
Modest diversification
The 3 months correlation between Amgen and Lion is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Amgen i.e., Amgen and Lion One go up and down completely randomly.
Pair Corralation between Amgen and Lion One
Given the investment horizon of 90 days Amgen Inc is expected to generate 0.38 times more return on investment than Lion One. However, Amgen Inc is 2.66 times less risky than Lion One. It trades about -0.03 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.1 per unit of risk. If you would invest 30,133 in Amgen Inc on August 29, 2024 and sell it today you would lose (2,126) from holding Amgen Inc or give up 7.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amgen Inc vs. Lion One Metals
Performance |
| Timeline |
| Amgen Inc |
| Lion One Metals |
Amgen and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Lion One
The main advantage of trading using opposite Amgen and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| Amgen vs. Pharvaris BV | Amgen vs. Brinker International | Amgen vs. Alcoa Corp | Amgen vs. Direxion Daily FTSE |
| Lion One vs. Silver Hammer Mining | Lion One vs. Reyna Silver Corp | Lion One vs. Guanajuato Silver | Lion One vs. Silver One Resources |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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