Correlation Between Catalent and Amgen
Can any of the company-specific risk be diversified away by investing in both Catalent 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 Catalent and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalent and Amgen Inc, you can compare the effects of market volatilities on Catalent 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 Catalent with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and Amgen.
Diversification Opportunities for Catalent and Amgen
Average diversification
The 3 months correlation between Catalent and Amgen is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Catalent 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 Catalent 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 Catalent i.e., Catalent and Amgen go up and down completely randomly.
Pair Corralation between Catalent and Amgen
Given the investment horizon of 90 days Catalent is expected to generate 0.42 times more return on investment than Amgen. However, Catalent is 2.38 times less risky than Amgen. It trades about 0.15 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.03 per unit of risk. If you would invest 5,428 in Catalent on September 1, 2024 and sell it today you would earn a total of 683.00 from holding Catalent or generate 12.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalent vs. Amgen Inc
Performance |
| Timeline |
| Catalent |
| Amgen Inc |
Catalent and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalent and Amgen
The main advantage of trading using opposite Catalent and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent 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.| Catalent vs. Crinetics Pharmaceuticals | Catalent vs. Enanta Pharmaceuticals | Catalent vs. Amicus Therapeutics | Catalent vs. Connect Biopharma Holdings |
| Amgen vs. Tff Pharmaceuticals | Amgen vs. Eliem Therapeutics | Amgen vs. Inhibrx | Amgen vs. Enliven Therapeutics |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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