Correlation Between Amgen and Rio Silver
Can any of the company-specific risk be diversified away by investing in both Amgen and Rio Silver 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 Rio Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Rio Silver, you can compare the effects of market volatilities on Amgen and Rio Silver 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 Rio Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Rio Silver.
Diversification Opportunities for Amgen and Rio Silver
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amgen and Rio is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Rio Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Silver 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 Rio Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Silver has no effect on the direction of Amgen i.e., Amgen and Rio Silver go up and down completely randomly.
Pair Corralation between Amgen and Rio Silver
If you would invest 25,722 in Amgen Inc on November 30, 2024 and sell it today you would earn a total of 5,093 from holding Amgen Inc or generate 19.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 2.44% |
| Values | Daily Returns |
Amgen Inc vs. Rio Silver
Performance |
| Timeline |
| Amgen Inc |
| Rio Silver |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Amgen and Rio Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Rio Silver
The main advantage of trading using opposite Amgen and Rio Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Rio Silver 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 Rio Silver will offset losses from the drop in Rio Silver's long position.The idea behind Amgen Inc and Rio Silver 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.| Rio Silver vs. BJs Restaurants | Rio Silver vs. Dominos Pizza Common | Rio Silver vs. Juniata Valley Financial | Rio Silver vs. Nasdaq Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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