Correlation Between Amazon and Amgen
Can any of the company-specific risk be diversified away by investing in both Amazon and Amgen 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 Amazon and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Amgen Inc, you can compare the effects of market volatilities on Amazon and Amgen 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 Amazon with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Amgen.
Diversification Opportunities for Amazon and Amgen
Very good diversification
The 3 months correlation between Amazon and Amgen is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Amazon 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 Amazon Inc are associated (or correlated) with Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of Amazon i.e., Amazon and Amgen go up and down completely randomly.
Pair Corralation between Amazon and Amgen
Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.91 times more return on investment than Amgen. However, Amazon Inc is 1.1 times less risky than Amgen. It trades about 0.22 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.15 per unit of risk. If you would invest 17,536 in Amazon Inc on August 30, 2024 and sell it today you would earn a total of 1,890 from holding Amazon Inc or generate 10.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Amgen Inc
Performance |
| Timeline |
| Amazon Inc |
| Amgen Inc |
Amazon and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Amgen
The main advantage of trading using opposite Amazon and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Amgen 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 Amgen will offset losses from the drop in Amgen's long position.| Amazon vs. Apple Inc | Amazon vs. Apple Inc | Amazon vs. Superior Plus Corp | Amazon vs. SIVERS SEMICONDUCTORS AB |
| Amgen vs. REVO INSURANCE SPA | Amgen vs. Ameriprise Financial | Amgen vs. PT Indofood Sukses | Amgen vs. Mizuho Financial Group |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |