Correlation Between 4D Molecular and Amgen
Can any of the company-specific risk be diversified away by investing in both 4D Molecular 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 4D Molecular and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 4D Molecular Therapeutics and Amgen Inc, you can compare the effects of market volatilities on 4D Molecular 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 4D Molecular with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4D Molecular and Amgen.
Diversification Opportunities for 4D Molecular and Amgen
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FDMT and Amgen is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding 4D Molecular Therapeutics and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and 4D Molecular 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 4D Molecular Therapeutics 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 4D Molecular i.e., 4D Molecular and Amgen go up and down completely randomly.
Pair Corralation between 4D Molecular and Amgen
Given the investment horizon of 90 days 4D Molecular Therapeutics is expected to under-perform the Amgen. In addition to that, 4D Molecular is 1.56 times more volatile than Amgen Inc. It trades about -0.15 of its total potential returns per unit of risk. Amgen Inc is currently generating about -0.22 per unit of volatility. If you would invest 31,465 in Amgen Inc on August 29, 2024 and sell it today you would lose (3,480) from holding Amgen Inc or give up 11.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
4D Molecular Therapeutics vs. Amgen Inc
Performance |
| Timeline |
| 4D Molecular Therapeutics |
| Amgen Inc |
4D Molecular and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 4D Molecular and Amgen
The main advantage of trading using opposite 4D Molecular and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4D Molecular 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.| 4D Molecular vs. Bright Minds Biosciences | 4D Molecular vs. HP Inc | 4D Molecular vs. Intel | 4D Molecular vs. Chevron Corp |
| Amgen vs. Pharvaris BV | Amgen vs. Brinker International | Amgen vs. Alcoa Corp | Amgen vs. Direxion Daily FTSE |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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