Correlation Between Apple and Amgen
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Amgen Inc, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Amgen.
Diversification Opportunities for Apple and Amgen
Excellent diversification
The 3 months correlation between Apple and Amgen is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Apple 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 Apple 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 Apple i.e., Apple and Amgen go up and down completely randomly.
Pair Corralation between Apple and Amgen
Assuming the 90 days trading horizon Apple Inc is expected to generate 1.06 times more return on investment than Amgen. However, Apple is 1.06 times more volatile than Amgen Inc. It trades about 0.11 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.02 per unit of risk. If you would invest 17,986 in Apple Inc on September 3, 2024 and sell it today you would earn a total of 4,449 from holding Apple Inc or generate 24.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Amgen Inc
Performance |
| Timeline |
| Apple Inc |
| Amgen Inc |
Apple and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Amgen
The main advantage of trading using opposite Apple and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. TRADEDOUBLER AB SK | Apple vs. MARKET VECTR RETAIL | Apple vs. CANON MARKETING JP | Apple vs. Salesforce |
| Amgen vs. Iridium Communications | Amgen vs. AIR PRODCHEMICALS | Amgen vs. Consolidated Communications Holdings | Amgen vs. Silicon Motion Technology |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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