Correlation Between Amgen and South Jersey
Can any of the company-specific risk be diversified away by investing in both Amgen and South Jersey 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 South Jersey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and South Jersey Industries, you can compare the effects of market volatilities on Amgen and South Jersey 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 South Jersey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and South Jersey.
Diversification Opportunities for Amgen and South Jersey
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amgen and South is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and South Jersey Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Jersey Industries 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 South Jersey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Jersey Industries has no effect on the direction of Amgen i.e., Amgen and South Jersey go up and down completely randomly.
Pair Corralation between Amgen and South Jersey
Given the investment horizon of 90 days Amgen Inc is expected to generate 4.14 times more return on investment than South Jersey. However, Amgen is 4.14 times more volatile than South Jersey Industries. It trades about 0.02 of its potential returns per unit of risk. South Jersey Industries is currently generating about -0.09 per unit of risk. If you would invest 25,542 in Amgen Inc on September 3, 2024 and sell it today you would earn a total of 2,745 from holding Amgen Inc or generate 10.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 11.11% |
| Values | Daily Returns |
Amgen Inc vs. South Jersey Industries
Performance |
| Timeline |
| Amgen Inc |
| South Jersey Industries |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amgen and South Jersey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and South Jersey
The main advantage of trading using opposite Amgen and South Jersey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, South Jersey 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 South Jersey will offset losses from the drop in South Jersey's long position.| Amgen vs. Pfizer Inc | Amgen vs. Johnson Johnson | Amgen vs. Highway Holdings Limited | Amgen vs. QCR Holdings |
| South Jersey vs. Hurco Companies | South Jersey vs. Marfrig Global Foods | South Jersey vs. Mayfair Gold Corp | South Jersey vs. Chester Mining |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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