Correlation Between Amgen and Transocean
Can any of the company-specific risk be diversified away by investing in both Amgen and Transocean 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 Transocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Transocean, you can compare the effects of market volatilities on Amgen and Transocean 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 Transocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Transocean.
Diversification Opportunities for Amgen and Transocean
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Amgen and Transocean is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean 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 Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of Amgen i.e., Amgen and Transocean go up and down completely randomly.
Pair Corralation between Amgen and Transocean
Given the investment horizon of 90 days Amgen Inc is expected to under-perform the Transocean. But the stock apears to be less risky and, when comparing its historical volatility, Amgen Inc is 1.68 times less risky than Transocean. The stock trades about -0.14 of its potential returns per unit of risk. The Transocean is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 403.00 in Transocean on August 28, 2024 and sell it today you would earn a total of 35.00 from holding Transocean or generate 8.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amgen Inc vs. Transocean
Performance |
| Timeline |
| Amgen Inc |
| Transocean |
Amgen and Transocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Transocean
The main advantage of trading using opposite Amgen and Transocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Transocean 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 Transocean will offset losses from the drop in Transocean's long position.| Amgen vs. Eliem Therapeutics | Amgen vs. HCW Biologics | Amgen vs. Scpharmaceuticals | Amgen vs. Milestone Pharmaceuticals |
| Transocean vs. Nabors Industries | Transocean vs. Precision Drilling | Transocean vs. Seadrill Limited | Transocean vs. Patterson UTI Energy |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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