Correlation Between Amgen and Scilex Holding
Can any of the company-specific risk be diversified away by investing in both Amgen and Scilex Holding 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 Scilex Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Scilex Holding, you can compare the effects of market volatilities on Amgen and Scilex Holding 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 Scilex Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Scilex Holding.
Diversification Opportunities for Amgen and Scilex Holding
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Amgen and Scilex is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Scilex Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scilex Holding 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 Scilex Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scilex Holding has no effect on the direction of Amgen i.e., Amgen and Scilex Holding go up and down completely randomly.
Pair Corralation between Amgen and Scilex Holding
Given the investment horizon of 90 days Amgen is expected to generate 4.46 times less return on investment than Scilex Holding. But when comparing it to its historical volatility, Amgen Inc is 8.1 times less risky than Scilex Holding. It trades about 0.05 of its potential returns per unit of risk. Scilex Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 147.00 in Scilex Holding on August 29, 2024 and sell it today you would lose (120.00) from holding Scilex Holding or give up 81.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Amgen Inc vs. Scilex Holding
Performance |
| Timeline |
| Amgen Inc |
| Scilex Holding |
Amgen and Scilex Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Scilex Holding
The main advantage of trading using opposite Amgen and Scilex Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Scilex Holding 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 Scilex Holding will offset losses from the drop in Scilex Holding's long position.| Amgen vs. Eliem Therapeutics | Amgen vs. Scpharmaceuticals | Amgen vs. Milestone Pharmaceuticals | Amgen vs. Seres Therapeutics |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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