Correlation Between Biogen and Amarin PLC
Can any of the company-specific risk be diversified away by investing in both Biogen and Amarin PLC 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 Biogen and Amarin PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biogen Inc and Amarin PLC, you can compare the effects of market volatilities on Biogen and Amarin PLC 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 Biogen with a short position of Amarin PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biogen and Amarin PLC.
Diversification Opportunities for Biogen and Amarin PLC
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biogen and Amarin is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Biogen Inc and Amarin PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amarin PLC and Biogen 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 Biogen Inc are associated (or correlated) with Amarin PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amarin PLC has no effect on the direction of Biogen i.e., Biogen and Amarin PLC go up and down completely randomly.
Pair Corralation between Biogen and Amarin PLC
Given the investment horizon of 90 days Biogen Inc is expected to under-perform the Amarin PLC. But the stock apears to be less risky and, when comparing its historical volatility, Biogen Inc is 3.11 times less risky than Amarin PLC. The stock trades about -0.07 of its potential returns per unit of risk. The Amarin PLC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 144.00 in Amarin PLC on August 28, 2024 and sell it today you would lose (91.00) from holding Amarin PLC or give up 63.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biogen Inc vs. Amarin PLC
Performance |
| Timeline |
| Biogen Inc |
| Amarin PLC |
Biogen and Amarin PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biogen and Amarin PLC
The main advantage of trading using opposite Biogen and Amarin PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biogen position performs unexpectedly, Amarin PLC 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 Amarin PLC will offset losses from the drop in Amarin PLC's long position.| Biogen vs. Bristol Myers Squibb | Biogen vs. AbbVie Inc | Biogen vs. Merck Company | Biogen vs. Gilead Sciences |
| Amarin PLC vs. Scilex Holding | Amarin PLC vs. Biogen Inc | Amarin PLC vs. Gilead Sciences | Amarin PLC vs. AstraZeneca PLC ADR |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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