Correlation Between Safe and Amgen
Can any of the company-specific risk be diversified away by investing in both Safe 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 Safe and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safe and Green and Amgen Inc, you can compare the effects of market volatilities on Safe 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 Safe with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safe and Amgen.
Diversification Opportunities for Safe and Amgen
Poor diversification
The 3 months correlation between Safe and Amgen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Safe and Green and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Safe 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 Safe and Green 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 Safe i.e., Safe and Amgen go up and down completely randomly.
Pair Corralation between Safe and Amgen
Considering the 90-day investment horizon Safe and Green is expected to under-perform the Amgen. In addition to that, Safe is 4.51 times more volatile than Amgen Inc. It trades about -0.06 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 31,669 in Amgen Inc on September 2, 2024 and sell it today you would lose (3,382) from holding Amgen Inc or give up 10.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safe and Green vs. Amgen Inc
Performance |
| Timeline |
| Safe and Green |
| Amgen Inc |
Safe and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safe and Amgen
The main advantage of trading using opposite Safe and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safe 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.| Safe vs. Avadel Pharmaceuticals PLC | Safe vs. Cumberland Pharmaceuticals | Safe vs. Teleflex Incorporated | Safe vs. Akanda Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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