Correlation Between Amgen and Oasis Petroleum
Can any of the company-specific risk be diversified away by investing in both Amgen and Oasis Petroleum 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 Oasis Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Oasis Petroleum, you can compare the effects of market volatilities on Amgen and Oasis Petroleum 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 Oasis Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Oasis Petroleum.
Diversification Opportunities for Amgen and Oasis Petroleum
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amgen and Oasis is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Oasis Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oasis Petroleum 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 Oasis Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oasis Petroleum has no effect on the direction of Amgen i.e., Amgen and Oasis Petroleum go up and down completely randomly.
Pair Corralation between Amgen and Oasis Petroleum
Given the investment horizon of 90 days Amgen Inc is expected to under-perform the Oasis Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Amgen Inc is 2.01 times less risky than Oasis Petroleum. The stock trades about -0.3 of its potential returns per unit of risk. The Oasis Petroleum is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 5,593 in Oasis Petroleum on September 12, 2024 and sell it today you would lose (92.00) from holding Oasis Petroleum or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.82% |
| Values | Daily Returns |
Amgen Inc vs. Oasis Petroleum
Performance |
| Timeline |
| Amgen Inc |
| Oasis Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amgen and Oasis Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Oasis Petroleum
The main advantage of trading using opposite Amgen and Oasis Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Oasis Petroleum 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 Oasis Petroleum will offset losses from the drop in Oasis Petroleum's long position.| Amgen vs. Victory Integrity Smallmid Cap | Amgen vs. Hilton Worldwide Holdings | Amgen vs. NVIDIA | Amgen vs. JPMorgan Chase Co |
| Oasis Petroleum vs. Amgen Inc | Oasis Petroleum vs. IPG Photonics | Oasis Petroleum vs. Alvotech | Oasis Petroleum vs. Amkor Technology |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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